As derived by Baran and Sweezy with the
assistance
of Joseph D.
Lundberg - The-Rich-and-the-Super-Rich-by-Ferdinand-Lundberg
In the meantime, forehanded fly-by-night, freedom-loving entrepreneurs extract from them whatever they may have in cash, usually public relief money, by means of conscientious overcharges for rent, food, clothing and dispensable gadgets dispensed on the basis of free misrepresentation.
Little noticed about the habitual poor is the fact that most of them are poorest of all in spirit. Most are from unusually large families in which they have been pointedly depreciated and "put down" by habitually irritated parents or, when such is not the case, they have come to see themselves as an operative cause of the harsh family condition-- another troublesome mouth to feed. Contrasting with the low sense of self-esteem among the poor is a correspondingly high sense of quiet self-esteem among the established rich, a reflex to their having usually been catered to by parents and servants and always spoken of as entitled to the best--in clothes, in food, in schools, in marriage, in trips to Europe and the like. The habitual rich do not place a high value upon self merely because they have money (as is often thought) but because in most cases they have been conditioned to being highly valued or overvalued by everybody around them. In many among poor as well as rich there is a noticeable reaction-formation to these basic feelings of value and nonvalue. Many of the poor react by assertively proclaiming their high value (which they do not really feel) and respond approvingly to the assertions of clergy, democratic ideologists and politicians about their superlative value: "God must love the poor because He made so many of them. " Some no doubt feel in their bones that it is a fairy tale--but it is a pleasant one. The rich, per contra, react by developing an outward mien of modesty, unassumingness, tentativeness and self- deprecation. Everybody remarks: "What a nice democratic guy! He'll talk with anybody, real friendly. Who'd ever think he was worth $100 million? A real gentleman. "
But, whether overassertive or submissive in attitude, most of the poor feel marked down. From birth onward their entire experience, with only unusual exceptions, has underlined and emphasized their lowliness and dispensability. Here, indeed, is the purely human difference between most of the rich and the poor, which F. Scott Fitzgerald correctly sensed in noting that the rich were different and which Ernest Hemingway failed to register when he observed in response that the only difference was that the rich had more money. Money, indeed, is the least of the differences, man for
man and pound for pound, between the rich and the poor, always allowing for exceptional cases on both sides of the fence. The broad difference lies in self-valuation-- too low in one case, too high in the other.
Two things the working American dreads but seldom talks about: loss of his health and loss of his job, which loss of health by itself usually entails. "Thank God for your health," it is commonly said reprovingly to complainers unless they are on their last legs.
Without the ownership of income-producing property, holding at most some small savings, some life insurance and possibly some equity in a mediocre mortgaged home, 90 per cent of Americans (as we have seen) are completely dependent on wages or salary. Relatively few hold jobs under tenure or long-term contract. If the jobs are removed the jugular vein is severed, not only on the means of livelihood but on self- esteem. Most Americans out of a job, no matter how they got that way, feel beaten. If joblessness continues very long they begin to be looked at askance by family and friends. Are they flat tires in the land of success? They begin to wonder themselves.
Full-scale employment is a prime basic aim of American public policy, supported by both parties. It has been recognized since the massive layoffs of the 1930's that here, if nowhere else, is a problem that could generate really big political upheaval. Although the labor force has grown with the population, unemployment remains and a number work part time as well as some at two jobs. Those the political managers have not been able to absorb into the labor force they have tried to provide for by (1) prolonged routine schooling, (2) the maintenance of a German-style standing army of more than three million men and (3) paid retirement at ages 62 to 65. Anyone retired, in the Wehrmacht, Luftwaffe or in school is obviously not unemployed. Yet approximately one-third cannot qualify for military service for physical or mental reasons; many of the same group plus others cannot absorb available schooling--a problem.
By way of providing for the inexorably growing labor force, the political parties foster schemes of government-subsidized capital expansion at home-- economic growth"--and investment abroad--"economic imperialism"under military protection.
There is present, then, especially as population growth has not even been tardily curbed, an obviously explosive situation--what professors are prone to call "a dynamic configuration. " This last implies only that almost anything can happen.
As long as they are employed at fairly reasonable wages Americans, far less politicalized than their European counterparts, are sufficiently content. Only low prices for farmers, low wages or unemployment, as history shows, can put a noticeable number of them into serious political motion and make them start thinking, reading and talking about their plight. Even then their political expression in the form of dissident parties has never amounted to a considerable percentage of the popular vote. As long as there seems any hope simply of bottom-level, hand-to-mouth employment, they remain glued to one of the prefabricated parties. In this they are very much like the diligent Germans who, as history attests, will go any way politically that the jobs lie. Perhaps this is only reasonable.
Popular Gratitude
Americans, moderately content (except for certain minority blocs in times of crisis), are almost to a man grateful for living in such a marvelous political and economic situation, extending liberty and equal justice to all--the last in part a reflex attitude to propaganda that begins early in the public schools. Those rank-and-file Americans who do not feel grateful tend to feel guilty over their lack of gratitude for such a reputedly fine system.
The intense gratitude felt by many is well illustrated by a case cited by Drew Pearson: Nick Galinfianakis, a lawyer, Duke University professor and member of the North Carolina state legislature, stood as a candidate for Congress in 1966 against Smith Bagley, young grandson of R. J. Reynolds, the tobacco tycoon. Pearson noted that Galinfianakis got into politics when friends put up $18 to file his name as a candidate for the state legislature. Said Galinfianakis to Pearson:
"With a name as monstrous as mine I thought it was a joke. I didn't think anyone would vote for a name like mine. However, my father was born in Crete and had a sense of gratitude toward this country. He used to run water out of a spigot and say, 'Look at the clean water we have to drink. We couldn't get that back in Greece! ' My father ran a little hot dog stand, and he felt a deep obligation to this country. I feel that in the Legislature I've been discharging his obligation--and mine. " 22
This is far from an isolated instance but typifies, I have found, a general attitude especially among immigrant groups down to the third generation and among recent refugees from Soviet and Nazi totalitarianism. Second- and third-generation children of immigrant families have in millions of cases been told, when complaining of anything, to "be grateful you have a roof over your head," "be grateful you have something at all to eat. " "Be grateful. . . . "
In most of the immigrant families, and among many of the earlier native frontier families, there remains a family tradition about some sort of distant, life-sapping and perhaps nameless hardship that has been narrowly escaped. The descendants of those who escaped that hardship, whatever it was, are repeatedly told to be grateful for living in a country of so many opportunities, such wide liberties, such bountiful fields, such clean water, such blue skies. The children owe gratitude above all to parents for choosing such a country. Examples of poor boys who have "made good," from Rockefeller and Carnegie to Everett M. Dirksen and Lyndon B. Johnson, are often cited and the mass media can run the list up into the thousands, the ten thousands. But, and here is the dazzling moment of truth, they can't run it up to a million, not to 500,000, not perhaps even to 100,000. There are enough showcase examples of "successes," however, who have made it to become the biggest used-car-lot operator in all history, to overwhelm most dissenters. The unconvinced are merely carpers. Whatever is amiss, it is implied, will soon be rectified, perhaps after the next big election.
If times are bad or uncertain they will sooner or later improve. In any event, there is no need for anything drastic although many persons would no doubt agree it would be a boon if there were only guaranteed jobs or income, perhaps hereditary jobs.
In reading their newspapers Americans reinforce their attitudes by making note of wholesale death camps in Germany; concentration camps and secret police in Russia; mass slaughters in India, Turkey, China and Pakistan; famines in Greece and elsewhere; overpopulation; lack of water, and, in general, secret police, executions, a bad situation all over the earth. They little realize that foreign newspapers, with equal truth, regularly feature lynchings and riots in the United States, American unemployment and slums rivaled perhaps only by those of India, floods, soup lines, Hoovervilles, gangsters, periodic American depressions and recessions, McCarthyite cultural vigilantism, widespread American lawlessness, traffic jams, ugly cities, water and air pollution, advertising fakery, and other vile conditions. There is, evidently, widespread editorial selection all over precisely with the idea of fostering in-group feelings of complacency. Actually, things are varyingly bad in most places. All Utopias are bogus.
Not everybody, of course, has traditional grounds, however tenuous, for feeling grateful. There are, first, the Negroes--10 per cent of the population. Negroes provide
clamorous evidence that the American system, whatever it is, is not benign in all its dispensations. Oddly, to those nurtured on myth, it has its Siberias.
There are, as a matter of fact, many others who seem to have little ground for gratitude; most of them appear to be of the politically apathetic strata that cannot even bring themselves to vote. As a financial writer for the New York Post, commenting on an analysis in the Social Security Bulletin, puts it:
The number of "poor" Americans-officially defined as having a yearly income of about $3,100 or less for a non-farm family of four-has been slashed a minimum of 6,000,000 since 1960. In the same period, the number of "near poor" just above this lowest income bracket has jumped at least 1,000,000. In totals today, 34,000,000 are living under the "poverty" line and 16,000,000 Americans are living right above it. These facts . . . are a warning of what even a slight economic recession could mean to 50,000,000 Americans. . . .
According to the Social Security yardstick, the poor individual today has 70? a day to spend on food plus $1. 40 for rent, clothes, home maintenance, transportation, everything else. The near poor person has 93? a day for food, plus $1. 85 for everything else. The fact is that one in four Americans (including 22,000,000 children under 18) now exist at these levels. The fact is that 43 per cent of all Americans over the age of 65 today are either poor or near poor. 23
This is about what many smokers spend in a day on cigars.
Perhaps even most of these feel grateful for something. If they do not, their discontent is not translated into political action. Very possibly most of them are of low IQ, perhaps inordinately low owing to diet deficiencies and self-depreciation.
But if 25 per cent of Americans live in poverty and near-poverty another 50 per cent can hardly be said, in the light of official income statistics, to be living more than meagerly. Touches of "the affluent society" begin to be encountered only in the lower levels of the economically upper 25 per cent and do not amount to much until one gets into the upper 10 per cent of income receivers. The "affluent society" is really a not too thick veneer, mostly a surcharged installment-credit affair.
Educational Levels
According to the 1960 census, the formal schooling of Americans twenty-five years old and over was as follows: 24
Total persons in this age range
No schooling
One to four years of school
Five to seven years of school
Eight years of school
One to three years of high school
Four years of high school
One to three years of college
Four years or more of college
Number
99,024,000
2,251,000
5,997,000
13,710,000
17,397,000
19,047,000
24,330,000
8,705,000
7,588,000
Per Cent
100. 0
2. 3
6. 0
13. 8
18. 0
19. 2
24. 5
8. 8
7. 5
Impressive when compared with the data for Basutoland, as they sometimes are, these statistics, as educators warn, do not portend what they are taken to portend owing to the general low quality of the American educational system, especially at the elementary and secondary levels and more than half of the college level. Most formal education in the United States is of the once-over-lightly, hit-and-run, masscult, bargain-counter and vocational variety so that even many college graduates have lingering difficulties about spelling, writing plain prose, identifying crucial historical figures, events and ideas or
reading beyond the level of Reader's Digest. If one is seeking effectively schooled people one must reduce the high school and college figures of a largely Potemkin- Village system by more than half. 25 No other large country, however, has a better system.
Education, of course, is not to be confused with mere schooling. Eric Hoffer, lightly schooled longshoreman-author of The True Believer, stands out as a far more thoroughly educated man than, for example, William F. Buckley, Jr. , Yale graduate who wrote the grotesque God and Man at Yale, as good a sample as any of the Buckley lucubrations. If one concedes Buckley every one of his points against Yale--and a civilized man would hold them to be positive virtues--one sees that he has unwarrantably built his case about a complex institution on few and untypical cases relating wholly to the minor undergraduate college, ignoring the mountain for the mouse.
It should not, then, be supposed that I make a cult of schooling and believe that even at its best it necessarily represents education. A cultivated autodidact like Hoffer (and there are others) can, as it so happens, hold his own with swarms of Ph. D. 's. A few topflight professors do not even have a bachelor's degree--Lewis Mumford for one example.
George Gallup, the poll wizard, every so often makes a popular survey on topics of immediate public interest. Invariably, on whatever is of, trivial interest he finds the public well informed, on whatever is of serious concern the vast majority is abysmally ignorant even though the newspapers have gone overboard on the subject. Few will know what a cyclotron is; nearly everyone will be quite expert on something like the Profumo Affair or miniskirts.
If one gives credence to the bare school statistics, however, a considerable part of the population is sufficiently educated: 40. 8 per cent over twenty-five as of 1960 had graduated from high school, with 7. 5 per cent finishing four years or more of college and 8. 8 attending college for one to three years, mostly one. There is obviously a weak base here for general intelligent political action. Statistically, the certified laggards outnumber the certified competents. Recalling the figures on the distribution of intelligence, knowing that formal completion of schooling in a loose system is not always indicative of solid knowledge and good judgment, it is evident why the populace is not able to select, elect and retain representatives who will act in their broad interests.
The Brain Drain
Educational attainment in the United States, indeed, is generally so low that this complex industrial nation must now increasingly draw much of its highly skilled personnel from abroad, often attracting from needier nations their people of great skill. Just as the United States now processes far more of the raw materials of the world than any other country so it seems well over the threshold of attracting to its shores by offers of higher salaries and better professional facilities most of the brains of the world. The process has been called "the brain drain. " Immigration, once confined to the unskilled, now features the highly skilled.
According to Foreign Affairs on the subject of the "brain drain" to the United States, "the statistics that have been developed on the so-called 'brain drain' present a somber picture. According to one UNESCO report, 43,000 scientists and engineers emigrated to the United States between 1949 and 1961, 'many' of whom came from the less developed countries. Of the 11,200 immigrants from Argentina alone between 1951 and 1963, nearly half were technicians and professional people, 15 percent were high-level administrators and 38 percent skilled workers. In 1964-65, 28 percent of the internships and 26 percent of the residencies in U. S. hospitals were filled by foreign graduates--
nearly 11,000 in all--and 80 percent of the foreign interns and 70 percent of the foreign residents were from developing countries. The drain from Asian nations, particularly Taiwan and Korea, is the most serious: it is estimated that over 90 percent of the Asian students who come here to study never return home. " 26
Those who came to the United States as advanced students came under foreign assistance programs; but they remain to fill in gaps of higher personnel that are not filled by the native products of the American school system.
England, which itself drains the Commonwealth countries of talent, is alarmed at the drain of its own physicians, surgeons and scientists to the United States. It is losing physicians and surgeons in the proportion of one-fifth to one-third of the graduates of its medical schools each year, some of them intensively trained specialists. 27
While the official unemployment rate hovers a little below 4 per cent and the extreme poverty rate around 25 per cent, the Department of Labor has advised that there are three million high-level jobs more or less permanently vacant in the country--for engineers, scientists, technicians, statisticians, administrators, nurses, physicians, teachers and the like. Neither the populace nor the educational system seems able to supply fully the needs of a technologically advanced system, partly because of native incapacity, partly because of educational shortsightedness and parsimony and partly because of low-level communal goals set by half-literate local community leaders and politicos.
Corporations, universities and government agencies compete madly with each other for well-schooled personnel. Local communities flounder and sink because men of informed judgment have been drawn away to distant points of the compass, leaving local Chamber of Commerce mentalities in charge.
These figures, true enough, can be interpreted in various ways. It can be said that technology has advanced so fast that it has left much of the population behind, breathless, which is strictly true. It can also be said that the population and communal institutions have not been adequate to meet rising needs, which is equally true.
Just as the level of educational attainment is not sufficient to meet the general needs of the time so, it is my argument, the level of educational attainment is not sufficient to meet the political needs of the people in selecting political personnel devoted to the needs of the nation. One gets instead the well-known variety of peanut politician, mainly exemplified at or near the top in streamlined hicks like Lyndon B. Johnson, Everett Dirksen, Orville Faubus and George C. Wallace, to name only a few of the currently most obtrusive and obnoxious. 28
As politics is the realm productive of public policy, the troubles of the country trace back inevitably to politics. Here we find largely inadequate officeholders chosen by largely inadequate people on the basis of largely irrelevant criteria, always allowing for the fact that a minority of the officeholders and a minority of the people are fully adequate to their responsibilities.
The democratic system thus comes full circle and in the United States presents a parody of itself on the governmental level. 29 As a consequence the entire land is officially plunged into Madison Avenue nonsense. The system, it turns out, has been infiltrated and subverted by boobocrats.
While institutional inadequacy is involved it is (contrary to a long line of radicals, liberals and plain democrats) by no means the whole story. Although many Americans above age twenty-five are inadequately educated and schooled, nobody at all is twisting their arms to make them remain that way. The major cities are all heavily supplied with public night schools on every level from the primary grades to university postgraduate
levels and anybody may rectify his educational defects very readily, usually free of direct charge. Some do; most don't. Again, most of the major cities have excellent libraries, very lightly patronized.
Where the interests of the broad public he may be discerned on any weekend when they hit the roads in their cars. While this aimless driving about on superb highways may be cosmically innocent, like praying, it is not done by a populace seriously concerned about its destiny. It is done, in fact, by handicapped boobs.
The Market Place
What we have before us is an operative and a formal political-legal system. The latter, it should be perfectly understood, is quite well devised to respond in an orderly, systematic way to the collective will of the populace.
The operative system, the real system--control by corporation--subsidized politicians--quickly came into being and prevailed owing simply to the inability of the electorate to understand and use properly the system offered. This electorate consisted almost entirely of rustic Anglo-Saxon and Scotch-Irish hinds and, in the course of time, largely illiterate continental European immigrants.
With the spread of the popular franchise after 1830 the system decreasingly elevated characters like George Washington, John Adams, Thomas Jefferson and James Madison, the choices of an educated landed and mercantile enfranchised political elite, and instead pushed up from the soil confused Jacksons, Van Burens, Buchanans, Grants, McKinleys and more recently Hardings, Coolidges, Eisenhowers, Johnsons et al. The trend was even more marked on the lower levels and only exceptionally did men of genuine political grasp make their way upward. Many of this order simply did not make it and turned away from politics.
The operative system that came into being, then, was a reflex to popular rather than institutional inadequacy, an important distinction. It is the Marxist idea that all social evil is traceable to existing institutions. I deny this although I do not deny that existing institutions are often influences toward evil, especially as these institutions are distorted under usage. Beautiful parks are despoiled by ordinary people misusing them, not by their managers. 30
In glancing at the market place, it will be observed that what is chiefly criticizable about it is that much of it, as in "democratic" politics, represents a genuine adjustment to the low-level understanding and goals of much of its public, the customers. It is also true, however, that much of this market place simply ignores the customer, the public, and goes about blithely frying its fish in its own way, as in the establishment of monopoly arrangements. In many ways the market and its institutions, as it turns out, pointedly do not exist to serve the public; the public exists to serve the market, to facilitate its operation. 31
The American economist Thorstein Veblen developed the concept of economic surplus, most recently employed by the neo-Marxists Baran and Sweezy in computing it (for the first time) for 1929-63. It was Veblen's contention in The Theory of Business Enterprise and The Theory of the Leisure Class that much, perhaps most, of this surplus was wasted, purposely and conscientiously, so that it could not be used to improve institutions or the life of the people as a whole. The argument was: Capitalism establishes monopolies and uses advanced technology in order to increase surplus to a certain point and then wastes much or most of this surplus in order not to alter the necessary conditions for generating such surplus. Instead of operating to uplift and improve everybody and ameliorate the conditions of life, thus altering institutions, it
was held it operated to keep everybody right where he was, which meant that the rich became richer and the poor remained poor or meagerly sustained.
The economic surplus, specifically, is the difference between what a society produces and the cost of producing it. The larger the surplus the more a society has to dispose of in various ways of its theoretical choice.
As derived by Baran and Sweezy with the assistance of Joseph D. Phillips from orthodox official data, since 1929 the American surplus has ranged from a low of 40. 4 per cent of gross national product in 1934 to a high of 71. 6 per cent in 1943; it stood at 56. 1 per cent in 1963. It stood at 46. 9 per cent in 1929 and has shown a definite tendency to rise over the decades. As estimates are used even in some of the official government figures employed, there is room for error. But even if error went as high as 10 per cent, or even 15 per cent, either way, the computations would be broadly indicative.
The major components of the surplus for 1963, for example, were as follows: 32
Total property income
(Corporate and noncorporate income, rents,
interest, profit component of corporate
officers, etc. )
Waste in distribution (sales effort, trade
advertising, etc. )
Nontrade corporate advertising
$104,618,000,000
Surplus employees' compensation
(Finance, insurance, realty and legal services,
which last cost only $870 million)
Absorbed by government
Total surplus
Percentage of Gross National Product
168,008,000,000
$327,725,000,000
56. 1
The direct return to property, then (out of gross national product of $589. 2 billions- plus), amounted to more than 17 per cent, which accrued in all to not much more than 10 per cent of the populace by any reckoning and was concentrated most heavily in a thin upper level of this 10 per cent. With respect to the surplus itself, the take of property was nearly 30 per cent.
Waste in the Business Process
The components of waste in the business process shown in the Baran-Sweezy computation consist of expenditures for advertising, market research, expense-account entertaining, maintaining an excessive number of sales outlets, public relations and lobbying, salaries and bonuses of salesmen, maintenance of showy office buildings and business litigation. None of this adds anything to the value or utility of what is produced. 33
There would be an element of waste in any system, but the argument here is that the waste under capitalism is institutionally determined in order to maintain capitalism itself rather than a high quality of social life. It does no good to argue with a Moscow- oriented Marxist that there is as much or more waste and irrationality in the Soviet system, because the defensive answer here would be that the Russian system was not an outgrowth of capitalism, as Marx stipulated that socialism should be, but is an originally backward system that must pass through a capitalist phase of labor exploitation and the
29,749,000,000
7,700,000,000
17,650,000,000
like in order to establish an industrial base for socialism, which is something that will be ushered into being in due course. Those who believe this, in view of the rise of a Soviet vested political bureaucracy, must draw upon whatever credulity they possess. My own view with respect both to capitalism and to sovietism is: There is no Santa Claus. Under whichever system one has, workers, it seems, will work and administrators will administer, on terms more or less unequal in all cases unless administrators deliberately choose to play fair.
As to advertising, it is recognized by many economists of repute as an uneconomic aberration, introduced by corporations as a substitute for competitive pricing. The advertisements create the illusion of product differentiation among large varieties of essentially identical products. These essentially identical products are, it is true, differently styled and packaged but in most cases the "talking points" are irrelevant.
Economists agree that the ultimate consumer pays for the advertising which in turn defeats the ultimate consumer in his search for lower prices, maintains monopoly prices. The worst thing that can happen in the system, in the view of its managers, is price- cutting, which reduces surplus.
Continual advertising itself, by its overwhelming success, in some cases leads to a virtual monopoly of some products--for example, the Gillette among the wet-shave safety razors.
As the gilt-edged economist E. H. Chamberlin observed, "selling methods which play upon the buyer's susceptibilities, which use against him [my emphasis] laws of psychology with which he is unfamiliar and therefore against which he cannot defend himself, which frighten or flatter or disarm him--all of these have nothing to do with his knowledge. They are not informative; they are manipulative. They create a new scheme of wants by rearranging his motives. " 34
"Madison Avenue" has come in for a great deal of condemnation. It should be observed, however, that the irrational extravagances of advertising could not be employed if there were not a vast public unable to see through the transparently deceptive devices used. It is public response that sustains advertising.
It is not that the advertisements are false in general, although false advertisements, advancing direct claims that can be disproven, have been found in abundance by the Federal Trade Commission. But, even though not false, the advertisements are almost invariably grossly misleading. They are vague, ambiguous, irrelevant and often absolutely nonsensical. By freely using improper techniques, advertising effectively subverts the work of the schools in teaching the proper uses of language and clarity in thinking. The multitudes of handicapped are intellectually defenseless when they come to advertising, and the process of absorbing the nonsense of the free-ranging advertisers intensifies their intellectual handicap. Many people talk and think about the world the way Madison Avenue has vividly but zanily taught them. 35
The logic of Madison Avenue is to employ language and pictures irrationally with a rational view to selling price-fixed goods and making money. It is able to do this because it carefully exploits human weakness--suggestibility and ignorance. In saying this, nothing is said about products or their quality--another story.
Reinvestment of Surplus
Whatever property owners do not consume or allocate to various self-serving nonprofit purposes they reinvest. Such reinvestment may be in already established areas or in new areas: new industries or foreign lands. Precisely what the propertied element consumes cannot be directly computed. Small property holders probably consume most
of their income. In the case of large property holders, income cannot be consumed without resorting to colossal extravagances such as the maintenance of six large homes.
What is left for consumption and personal reinvestment one may obtain some glimpse of by taking account what is reinvested by corporations. In 1962, as Baran and Sweezy show, expenditures of surplus by nonfinancial corporations for research and development totaled $12 billion and for outlays on plant and equipment $32 billion, of which a fantastic 81. 9 per cent was greedily charged as depreciation. Since 1953 the totals for research and development, plant outlays and abnormally exaggerated depreciation had climbed steadily and phenomenally. There was, thus, $48 billion reinvested out of total property income for the year of $99. 2 billion, or nearly half.
There was, furthermore, the item of foreign investment, possibly not more than half of which represented actual flow of capital from the United States. The total of direct foreign investments increased from $11. 8 billion in 1950 to $40. 6 billion in 1963, an increase of $28. 8 billion, according to official figures. Between 1950 and 1956 such investment each year ranged from half to three-quarters billion but thereafter in each year has usually far exceeded $1 billion and in 1957 exceeded $2 billion. It therefore seems safe to say that on the average at least half of property income is usually reinvested, with the proportions of what is reinvested increasing as one moves up the scale of property holders in point of individual magnitude. In general, the invested position of the propertied is steadily improving. Foreign investment is far more lucrative than domestic and the quest for foreign markets is what enables American industry to bypass in so many ways its own population.
Some of the approximate $50 billion that was left over may also have been reinvested as new personal investments. In any event, the property owners in that year had some $50 billion of unearned income at their personal disposition, roughly equivalent to the sum absorbed by the armed forces.
Yet, as Baran and Sweezy remark, the monopoly system tends to work at cross purposes with itself.
It tends to generate ever more surplus, yet it fails to provide the consumption and investment outlets required for the absorption of a rising surplus and hence for the smooth working of the system. Since surplus which cannot be absorbed will not be produced, it follows that the normal state of the monopoly capitalist economy is stagnation. With a given stock of capital and a given cost and price structure, the system's operating rate cannot rise above the point at which the amount of surplus produced can find the necessary outlets. And this means chronic underutilization of available human and material resources. Or, to put the point in slightly different terms, the system must operate at a point low enough on its profitability schedule not to generate more surplus than can be absorbed. 36
Compensation for surplus or intermediary employees, as Baran and Sweezy admit, would exist in any system; but it is their argument, for which they cite good reasons, that under the American system much of it is excessive and wasteful. The intermediation of brokers and agents adds nothing to the value of products. A real estate or stock broker, for example, may mediate the sale of the same property many times a year, drawing a commission each time. Nothing new has been added.
Government Absorption of Surplus
The largest absorption of the surplus of the highly productive American system, however, takes place through government. Here, as official data show, absorption of surplus has risen steadily from $10. 2 billion in 1929 to the level of $168 billion in 1963. Here is the statistical basis for the cry of statism against the welfare-warfare-subsidy
state. From 1929 to 1961 government spending steadily rose from 9. 8 per cent to 28. 8 per cent of gross national product. 37
It is common knowledge that some of government expenditure by anybody's standards represents waste, expenditure for socially unnecessary ends. The common notion of the congressional "pork barrel," with respect to which congressmen trade votes in order to get unnecessary expensive projects for their districts, supports the notion. The local folks are pleased but are postoffices in the form of Greek temples and colonial mansions necessary? Are various airfields and army posts necessary? Governmental absorption and spending of surplus, however, whether wasteful or not, "pumps" money back into the economy. The government, thus--local, state and federal--is the biggest customer in the marketplace and, if it considerably reduced or withdrew its patronage, the so-called private enterprise economic system would almost instantly collapse. By running Keynesian deficits it can push the economy ahead. By curtailing expenditures it can depress the whole structure.
Despite the outcries against statism, it has been mainly for the military establishment that government demands on the economy have been made. Whereas in 1929 less than 1 per cent of gross national product was devoted to military purposes, by 1957 it had risen to more than 10 per cent and accounted for approximately two-thirds of the aggregate expansion of all government spending. Government spending, then, is largely military spending.
Which government expenditures are socially necessary or sustaining and which are waste of surplus? We know already there is some waste, by common agreement; the question is only to determine how much there is, a difficult if not impossible task.
Whereas nondefense or civilian expenditures by government increased only from 7. 5 per cent of gross national product in 1929 to 9. 2 per cent in 1957, the military proportion increased by fifteen times. Transfer payments increased from 1. 6 per cent to 5. 9 per cent, less than four times. 38 Transfer payments comprise interest on government debt, subsidies minus surpluses of government enterprises, veterans' allowances, old- age pensions, unemployment benefits and the like.
Although some argue that military spending is not a prop to the economy and contend despite the 1930's that there would not be a depression if military spending were reduced (because with the reduction in military expenses there would presumably be a corresponding reduction in taxes and a compensating rise in private spending or in redundant investment), it seems inescapable that no scattered private spending or investment could replace the massive concentrated military effort which currently takes more than three million men out of the labor force and makes an effective demand for more than 10 per cent of the production of the labor force.
Instead of military spending, others argue, there could be an increase in socially necessary civilian spending as for hospitals, schools, sanatoria, playgrounds, health resorts, community centers, galleries, museums, lecture halls, libraries, public housing and the like. While such creations would indeed absorb surplus at as great a rate as one liked they would, clearly, be "socialistic. " Such a civilian creation by government would in many directions, as in housing, medicine and other areas, conflict with profit enterprises and by supplying libraries, museums, lecture halls, playgrounds and the like would provide alternate uses for the free time of people, to the possible detriment of profit enterprises like TV, movies, automobiles and so on. All this is precisely what is not wanted by the vested interests who exert decisive political leverage. But if there were effective political leadership, overswollen military budgets could be trimmed for these domestic purposes.
Merely to staff a great expansion in such socially useful facilities would require the diversion of much upper-level personnel from profit-making enterprises.
Some percentage of the military establishment, by the testimony of all schools of thought, represents waste. Some of it is necessary waste, arising from unavoidable circumstances; some is avoidable waste. There are, again, those who would argue that, humanly speaking, it is all waste; we need not follow this line of thought in a highly imperfect world. Owing to continual technological advance, moreover, there is rapid obsolescence of much military equipment in a situation where it is felt, hysterically, that the nation must be prepared at any moment for a maximum military effort to save its very life.
Large portions of civilian outlay by government can also readily be interpreted as waste. The federal roadbuilding program, as indicated in Note 28, supra, is considered (I think rightly) a huge example of compounding social waste by Baran and Sweezy, who also interpret slum clearance as in good part a waste of public money. This last item of waste comes about in this way: Instead of utilizing low-cost open spaces, readily available, the slum-clearing programs buy up deteriorated properties at good prices to the owners and then supply contractor-promoters with huge sums and excessive tax rebates to construct new buildings that rent at such prices as to bar slum dwellers. Slum clearance thus becomes indirectly subsidized luxury building, a delight to politicians, many of them participants in the building syndicates.
Government expenditures for schools and hospitals, health and sanitary measures (water supply, sewage and garbage removal), conservation and recreation, housing and facilitation of commerce, police and fire protection, courts and prisons, legislatures and administrative offices are conceded by these writers to be socially necessary. Presumably they would agree that libraries, post offices, government printing and the maintenance of rivers and harbors are in the same category. But, as they point out, there has been little expansion of such services relative to the expansion of gross national product. Most expansion of governmental spending and allocation of funds has been in areas that are more or less, or entirely, socially and economically wasteful or rationally questionable.
Thus, while socially necessary services are skimped and held down with cries for "economy in government," the sluice gates are wide open for the military in repelling a Leninist communism held to be lapping at distant shores and in underwriting schemes of roadbuilding and urban renewal that not only facilitate huge profit-making enterprises but undermine those that are socially more efficient such as railroads.
In general, what Baran and Sweezy say here is true. The stake of property is steadily being increased under the camouflage of high depreciation write-offs. Persuasive advertising is wasteful and exploitative of credulity, a substitute for genuine competition. More surplus employees are utilized than is socially necessary, although not more than this kind of system requires. Much of what the government spends is indeed wasteful in various degrees and from various points of view and much of it, as in the approach to housing and the automobile complex, is positively harmful. In this last category we have, not merely social waste for profit, but positive, certifiable social harm for profit. Beyond the harm produced by the approaches of public policy to urban housing and the automobile complex there is the harm induced by misallocation of resources, as in military overspending for Over-Kill.
The prime virtue of capitalism in theory is that it provides a mechanism--the ostensible free market--for meeting the effective varied demands of people at the best prices. What happens, however, when people are deviously induced to make an effective demand for something they do not need (automobiles instead of houses) or
something that will not meet some need (chewing gum instead of psychotherapy) is not embraced in the theory. People must know their need and how to satisfy it. Again, if the market is under monopoly, people cannot make effective demand at the best possible prices even for things they do not need--things that do not cater to necessity, convenience or comfort. Ideas of spurious need are inculcated by playing upon latent fears, such as that other people will ostracize them if they do not use deodorants and a long line of other products. Advertising, seen in this aspect, is obviously a vast booby trap, a legally condoned swindle for profit. 39
Quality in the Consumer Economy
As to the quality of goods in the Consumer Economy, where consumption in and of itself is regarded by many public men as the remedy for all ills, there is a wide range. In order to appeal to the impecunious, much of what is offered is sleazy, saturated with built-in obsolescence. The case made by Ralph Nader about the Detroit automobile could in general be applied to many products, although in the automobile it was more serious than usual owing to the immediate life-and-death aspect. 40
In order that at least the more literate portions of the middle classes may pick their way about among a large variety of substandard, overpriced and absolutely unnecessary products that cater at most to free-floating anxiety and suppressed restiveness, there have emerged successful private enterprises such as Consumer's Union and Consumer's Research. By means of regular reports these organizations, and others, advise subscribers of the results of product analysis and price comparison.
Strong in the production of capital goods (generally machinery designed for further production), the American productive system in the line of consumer offerings is about as uneven as the American school system. The main consideration all along the line is admittedly the rate of profit. Producers, it must be conceded, are entitled to fair returns for effort, but the object of business enterprise in general and of the American business system in all its parts is to obtain maximum possible return without regard for quality or social necessity, comfort or convenience. Do-nothing products, economic placebos, are quite common. Under the rubric of glorious freedom, if they make a big profit through misleading advertising as in the case of deodorants, they are justified. The vendor has given the customer what he has been frightened or cajoled into wanting and has given employment perhaps to thousands who are raising children to grow into another army of worker-consumers making null or below-par products--all, however, for somebody's profit.
Many products in the market, especially in pharmaceuticals and foods, are repeatedly found in government laboratories to be positively harmful. This is a long story in itself.
Just how little fear of authority producers feel under the skull-and-crossbones of freedom we learn from Admiral Hyman G. Rickover, of the Bureau of Ships of the Navy and known as "The Father of the Atomic Submarine," a really competent man. Rickover announced that work on many atomic submarines was being delayed because parts, upon which performance depended, were being delivered that did not follow specifications. He cited "the inability of American industry to meet the exacting demands for quality and reliability posed by modem technology. " and charged that industrialists did not know what went on in their plants, which were left to administrators chiefly interested in getting more contracts. The National Aeronautics and Space Administration at the same time voiced similar complaints, which it later smothered in a tribute to the cooperation of industry. Rickover not only held to his position but has many times made it known in the same terms. 41 The deaths of three astronauts were ascribed to poor equipment.
Not all officials react disagreeably to treating the government as though it was a rank- and-file customer. The political authorities of Massachusetts, for example, accepted the Massachusetts Turnpike as constructed. Soon after completion the road was already crumbling over long stretches and was being extensively rebuilt. As one who has driven over this road many times and experienced its undulations, seen it pitted with holes and watched repair crews at work over its entire length, I can personally testify to its generally poor condition, especially as contrasted with the New York State Thruway, with which it connects. As soon as one travels on to the New York State road from the Massachusetts road one is aware of a dramatic transition from uncertainty and hazard to a well-engineered, well-built road. The ancient Romans built roads that are still used for heavy-duty purposes.
A very wide range of consumer goods conforms more to the standards of the Massachusetts Turnpike than to the New York State Thruway, all produced under the pressing motivation of a quest for maximum profits. Cheap goods, perhaps not paradoxically, are often socially expensive goods.
Institutions or People
'The full-blown Marxist will have no difficulty putting his finger on the difficulty. He will say it is capitalism, or monopoly capitalism. With this convenient analytical abstraction, I do not agree.
Capitalist institutions, being oriented toward private profit in return for the commitment of private capital, no doubt facilitate and reinforce inherent selfish drives in the acquisitive-minded, encourage corner-cutting. It is part of self-serving capitalist theory that the driving self-interest of the entrepreneur indirectly serves society, with an invisible hand conferring benefits out of the process. Up to a point this may be true, or it may once under competitive conditions have come nearer the truth than it is under monopoly conditions. But as the screws are rationally tightened to generate more and more profits, more and more surplus, the gains in the productive sector of the economy are increasingly made at the expense of the consuming sector. And social welfare lies at least as much as or more in the consuming sector than in the producing sector. Production is merely the means, consumption the end. In dominant American thinking, this order is reversed, Again, much of what is termed capitalism has been simple illegality, outside the system.
If the general public were as rational as the producers and had at its fingertips as much knowledge and insight, and ability to apply knowledge and insight, all would perhaps be well. But a very large section of the public, a majority, is woefully handicapped through the possession of insufficient rationality, knowledge and insight. Its members are as amateur participants in a card game with experts. Not only are the politico-economic adversaries of the broad public highly expert but they are what is known among card players as sharpers, prone to violate the rules. These sharpers play a cooperative game with marked cards. Not only this but to some extent they are mind readers. Armed with a knowledge of psychological laws and backed up by computer technology, the large- scale entrepreneur knows in advance what plays the amateurs in elections and markets are bound to make. The amateurs, in fact, are inherently restricted in the plays they are able to make in their own defense. Even if they were pantologists they would not be able to make better choices than a mass-oriented monopoly market and complex political system offer.
In the selection and purchase of goods and services, the disorganized public is led in some cases by necessity, in others by the quest for convenience and comfort and, at times, by the attraction of dispensable diversion and luxury. Beyond these ends it may, too, as advertisers well realize, be led by the prospect of purely imaginary and illusory
advantages, as that ladies will become intensely amorous at the sight of men who use certain pomades.
By Way of Summation
The cleverness of the rich, as I see it, has consisted largely of the fact that the acquisitors among them have been able to operate practically unhindered by law among multitudes of thoroughly confused people, who are readily victimized in politics and economics. The victims have at all times been left externally free to choose in their own way. The rich, whether they knew it or not, could always have been fortified in the thought that the handicapped will usually make the wrong choices under the rule of external freedom.
Approached from the standpoint either of IQ or formal education, far more than half the population has not had the knowledge, intelligence or ability to make choices in its own interests. It has merely drifted with the tide, trusting to its feelings, while others gathered in the hay. Nobody in most instances twisted the arms of this population to make it perform as it did in the polling booth and the market; on the other hand, rescue parties have been few and have not been understood as such by the victims, who regarded saviors such as Mrs. Sanger as enemies. A whole line of would-be saviors, including socialists such as Norman Thomas, have been rotten-egged for taking the trouble to make known their panaceas to this same population. Left and right, radicals, reformers, liberals and labor organizers have been bustled off to jails, not usually by capitalists or even by capitalist agents, but by the local rank and file of victims and their duly elected officers.
Underlying the low IQs and faulty education have been deliberately contrived cultural deprivation as in the case of Negroes and spontaneous, self-induced cultural deprivation as in the case of rural and small-town Protestants and urban Catholics. These, it is evident, have been self-designated victims in a game with rules the rank-and-file did not understand.
What is evidently the case is that a large section of the population is dependent- emotionally, intellectually, economically and politically--and is unable inherently or by conditioning to function in its own behalf under free institutions. A large section of the population, indeed, if it is to be properly served, should be regarded as public wards, ethically subject to rather close highly informed benign guidance in making life dispositions. No doubt much of this dependency arises from its conditioning, from its unreasonably inculcated faith that provision will be made for it, if not by man then by some remote deity.
Little noticed about the habitual poor is the fact that most of them are poorest of all in spirit. Most are from unusually large families in which they have been pointedly depreciated and "put down" by habitually irritated parents or, when such is not the case, they have come to see themselves as an operative cause of the harsh family condition-- another troublesome mouth to feed. Contrasting with the low sense of self-esteem among the poor is a correspondingly high sense of quiet self-esteem among the established rich, a reflex to their having usually been catered to by parents and servants and always spoken of as entitled to the best--in clothes, in food, in schools, in marriage, in trips to Europe and the like. The habitual rich do not place a high value upon self merely because they have money (as is often thought) but because in most cases they have been conditioned to being highly valued or overvalued by everybody around them. In many among poor as well as rich there is a noticeable reaction-formation to these basic feelings of value and nonvalue. Many of the poor react by assertively proclaiming their high value (which they do not really feel) and respond approvingly to the assertions of clergy, democratic ideologists and politicians about their superlative value: "God must love the poor because He made so many of them. " Some no doubt feel in their bones that it is a fairy tale--but it is a pleasant one. The rich, per contra, react by developing an outward mien of modesty, unassumingness, tentativeness and self- deprecation. Everybody remarks: "What a nice democratic guy! He'll talk with anybody, real friendly. Who'd ever think he was worth $100 million? A real gentleman. "
But, whether overassertive or submissive in attitude, most of the poor feel marked down. From birth onward their entire experience, with only unusual exceptions, has underlined and emphasized their lowliness and dispensability. Here, indeed, is the purely human difference between most of the rich and the poor, which F. Scott Fitzgerald correctly sensed in noting that the rich were different and which Ernest Hemingway failed to register when he observed in response that the only difference was that the rich had more money. Money, indeed, is the least of the differences, man for
man and pound for pound, between the rich and the poor, always allowing for exceptional cases on both sides of the fence. The broad difference lies in self-valuation-- too low in one case, too high in the other.
Two things the working American dreads but seldom talks about: loss of his health and loss of his job, which loss of health by itself usually entails. "Thank God for your health," it is commonly said reprovingly to complainers unless they are on their last legs.
Without the ownership of income-producing property, holding at most some small savings, some life insurance and possibly some equity in a mediocre mortgaged home, 90 per cent of Americans (as we have seen) are completely dependent on wages or salary. Relatively few hold jobs under tenure or long-term contract. If the jobs are removed the jugular vein is severed, not only on the means of livelihood but on self- esteem. Most Americans out of a job, no matter how they got that way, feel beaten. If joblessness continues very long they begin to be looked at askance by family and friends. Are they flat tires in the land of success? They begin to wonder themselves.
Full-scale employment is a prime basic aim of American public policy, supported by both parties. It has been recognized since the massive layoffs of the 1930's that here, if nowhere else, is a problem that could generate really big political upheaval. Although the labor force has grown with the population, unemployment remains and a number work part time as well as some at two jobs. Those the political managers have not been able to absorb into the labor force they have tried to provide for by (1) prolonged routine schooling, (2) the maintenance of a German-style standing army of more than three million men and (3) paid retirement at ages 62 to 65. Anyone retired, in the Wehrmacht, Luftwaffe or in school is obviously not unemployed. Yet approximately one-third cannot qualify for military service for physical or mental reasons; many of the same group plus others cannot absorb available schooling--a problem.
By way of providing for the inexorably growing labor force, the political parties foster schemes of government-subsidized capital expansion at home-- economic growth"--and investment abroad--"economic imperialism"under military protection.
There is present, then, especially as population growth has not even been tardily curbed, an obviously explosive situation--what professors are prone to call "a dynamic configuration. " This last implies only that almost anything can happen.
As long as they are employed at fairly reasonable wages Americans, far less politicalized than their European counterparts, are sufficiently content. Only low prices for farmers, low wages or unemployment, as history shows, can put a noticeable number of them into serious political motion and make them start thinking, reading and talking about their plight. Even then their political expression in the form of dissident parties has never amounted to a considerable percentage of the popular vote. As long as there seems any hope simply of bottom-level, hand-to-mouth employment, they remain glued to one of the prefabricated parties. In this they are very much like the diligent Germans who, as history attests, will go any way politically that the jobs lie. Perhaps this is only reasonable.
Popular Gratitude
Americans, moderately content (except for certain minority blocs in times of crisis), are almost to a man grateful for living in such a marvelous political and economic situation, extending liberty and equal justice to all--the last in part a reflex attitude to propaganda that begins early in the public schools. Those rank-and-file Americans who do not feel grateful tend to feel guilty over their lack of gratitude for such a reputedly fine system.
The intense gratitude felt by many is well illustrated by a case cited by Drew Pearson: Nick Galinfianakis, a lawyer, Duke University professor and member of the North Carolina state legislature, stood as a candidate for Congress in 1966 against Smith Bagley, young grandson of R. J. Reynolds, the tobacco tycoon. Pearson noted that Galinfianakis got into politics when friends put up $18 to file his name as a candidate for the state legislature. Said Galinfianakis to Pearson:
"With a name as monstrous as mine I thought it was a joke. I didn't think anyone would vote for a name like mine. However, my father was born in Crete and had a sense of gratitude toward this country. He used to run water out of a spigot and say, 'Look at the clean water we have to drink. We couldn't get that back in Greece! ' My father ran a little hot dog stand, and he felt a deep obligation to this country. I feel that in the Legislature I've been discharging his obligation--and mine. " 22
This is far from an isolated instance but typifies, I have found, a general attitude especially among immigrant groups down to the third generation and among recent refugees from Soviet and Nazi totalitarianism. Second- and third-generation children of immigrant families have in millions of cases been told, when complaining of anything, to "be grateful you have a roof over your head," "be grateful you have something at all to eat. " "Be grateful. . . . "
In most of the immigrant families, and among many of the earlier native frontier families, there remains a family tradition about some sort of distant, life-sapping and perhaps nameless hardship that has been narrowly escaped. The descendants of those who escaped that hardship, whatever it was, are repeatedly told to be grateful for living in a country of so many opportunities, such wide liberties, such bountiful fields, such clean water, such blue skies. The children owe gratitude above all to parents for choosing such a country. Examples of poor boys who have "made good," from Rockefeller and Carnegie to Everett M. Dirksen and Lyndon B. Johnson, are often cited and the mass media can run the list up into the thousands, the ten thousands. But, and here is the dazzling moment of truth, they can't run it up to a million, not to 500,000, not perhaps even to 100,000. There are enough showcase examples of "successes," however, who have made it to become the biggest used-car-lot operator in all history, to overwhelm most dissenters. The unconvinced are merely carpers. Whatever is amiss, it is implied, will soon be rectified, perhaps after the next big election.
If times are bad or uncertain they will sooner or later improve. In any event, there is no need for anything drastic although many persons would no doubt agree it would be a boon if there were only guaranteed jobs or income, perhaps hereditary jobs.
In reading their newspapers Americans reinforce their attitudes by making note of wholesale death camps in Germany; concentration camps and secret police in Russia; mass slaughters in India, Turkey, China and Pakistan; famines in Greece and elsewhere; overpopulation; lack of water, and, in general, secret police, executions, a bad situation all over the earth. They little realize that foreign newspapers, with equal truth, regularly feature lynchings and riots in the United States, American unemployment and slums rivaled perhaps only by those of India, floods, soup lines, Hoovervilles, gangsters, periodic American depressions and recessions, McCarthyite cultural vigilantism, widespread American lawlessness, traffic jams, ugly cities, water and air pollution, advertising fakery, and other vile conditions. There is, evidently, widespread editorial selection all over precisely with the idea of fostering in-group feelings of complacency. Actually, things are varyingly bad in most places. All Utopias are bogus.
Not everybody, of course, has traditional grounds, however tenuous, for feeling grateful. There are, first, the Negroes--10 per cent of the population. Negroes provide
clamorous evidence that the American system, whatever it is, is not benign in all its dispensations. Oddly, to those nurtured on myth, it has its Siberias.
There are, as a matter of fact, many others who seem to have little ground for gratitude; most of them appear to be of the politically apathetic strata that cannot even bring themselves to vote. As a financial writer for the New York Post, commenting on an analysis in the Social Security Bulletin, puts it:
The number of "poor" Americans-officially defined as having a yearly income of about $3,100 or less for a non-farm family of four-has been slashed a minimum of 6,000,000 since 1960. In the same period, the number of "near poor" just above this lowest income bracket has jumped at least 1,000,000. In totals today, 34,000,000 are living under the "poverty" line and 16,000,000 Americans are living right above it. These facts . . . are a warning of what even a slight economic recession could mean to 50,000,000 Americans. . . .
According to the Social Security yardstick, the poor individual today has 70? a day to spend on food plus $1. 40 for rent, clothes, home maintenance, transportation, everything else. The near poor person has 93? a day for food, plus $1. 85 for everything else. The fact is that one in four Americans (including 22,000,000 children under 18) now exist at these levels. The fact is that 43 per cent of all Americans over the age of 65 today are either poor or near poor. 23
This is about what many smokers spend in a day on cigars.
Perhaps even most of these feel grateful for something. If they do not, their discontent is not translated into political action. Very possibly most of them are of low IQ, perhaps inordinately low owing to diet deficiencies and self-depreciation.
But if 25 per cent of Americans live in poverty and near-poverty another 50 per cent can hardly be said, in the light of official income statistics, to be living more than meagerly. Touches of "the affluent society" begin to be encountered only in the lower levels of the economically upper 25 per cent and do not amount to much until one gets into the upper 10 per cent of income receivers. The "affluent society" is really a not too thick veneer, mostly a surcharged installment-credit affair.
Educational Levels
According to the 1960 census, the formal schooling of Americans twenty-five years old and over was as follows: 24
Total persons in this age range
No schooling
One to four years of school
Five to seven years of school
Eight years of school
One to three years of high school
Four years of high school
One to three years of college
Four years or more of college
Number
99,024,000
2,251,000
5,997,000
13,710,000
17,397,000
19,047,000
24,330,000
8,705,000
7,588,000
Per Cent
100. 0
2. 3
6. 0
13. 8
18. 0
19. 2
24. 5
8. 8
7. 5
Impressive when compared with the data for Basutoland, as they sometimes are, these statistics, as educators warn, do not portend what they are taken to portend owing to the general low quality of the American educational system, especially at the elementary and secondary levels and more than half of the college level. Most formal education in the United States is of the once-over-lightly, hit-and-run, masscult, bargain-counter and vocational variety so that even many college graduates have lingering difficulties about spelling, writing plain prose, identifying crucial historical figures, events and ideas or
reading beyond the level of Reader's Digest. If one is seeking effectively schooled people one must reduce the high school and college figures of a largely Potemkin- Village system by more than half. 25 No other large country, however, has a better system.
Education, of course, is not to be confused with mere schooling. Eric Hoffer, lightly schooled longshoreman-author of The True Believer, stands out as a far more thoroughly educated man than, for example, William F. Buckley, Jr. , Yale graduate who wrote the grotesque God and Man at Yale, as good a sample as any of the Buckley lucubrations. If one concedes Buckley every one of his points against Yale--and a civilized man would hold them to be positive virtues--one sees that he has unwarrantably built his case about a complex institution on few and untypical cases relating wholly to the minor undergraduate college, ignoring the mountain for the mouse.
It should not, then, be supposed that I make a cult of schooling and believe that even at its best it necessarily represents education. A cultivated autodidact like Hoffer (and there are others) can, as it so happens, hold his own with swarms of Ph. D. 's. A few topflight professors do not even have a bachelor's degree--Lewis Mumford for one example.
George Gallup, the poll wizard, every so often makes a popular survey on topics of immediate public interest. Invariably, on whatever is of, trivial interest he finds the public well informed, on whatever is of serious concern the vast majority is abysmally ignorant even though the newspapers have gone overboard on the subject. Few will know what a cyclotron is; nearly everyone will be quite expert on something like the Profumo Affair or miniskirts.
If one gives credence to the bare school statistics, however, a considerable part of the population is sufficiently educated: 40. 8 per cent over twenty-five as of 1960 had graduated from high school, with 7. 5 per cent finishing four years or more of college and 8. 8 attending college for one to three years, mostly one. There is obviously a weak base here for general intelligent political action. Statistically, the certified laggards outnumber the certified competents. Recalling the figures on the distribution of intelligence, knowing that formal completion of schooling in a loose system is not always indicative of solid knowledge and good judgment, it is evident why the populace is not able to select, elect and retain representatives who will act in their broad interests.
The Brain Drain
Educational attainment in the United States, indeed, is generally so low that this complex industrial nation must now increasingly draw much of its highly skilled personnel from abroad, often attracting from needier nations their people of great skill. Just as the United States now processes far more of the raw materials of the world than any other country so it seems well over the threshold of attracting to its shores by offers of higher salaries and better professional facilities most of the brains of the world. The process has been called "the brain drain. " Immigration, once confined to the unskilled, now features the highly skilled.
According to Foreign Affairs on the subject of the "brain drain" to the United States, "the statistics that have been developed on the so-called 'brain drain' present a somber picture. According to one UNESCO report, 43,000 scientists and engineers emigrated to the United States between 1949 and 1961, 'many' of whom came from the less developed countries. Of the 11,200 immigrants from Argentina alone between 1951 and 1963, nearly half were technicians and professional people, 15 percent were high-level administrators and 38 percent skilled workers. In 1964-65, 28 percent of the internships and 26 percent of the residencies in U. S. hospitals were filled by foreign graduates--
nearly 11,000 in all--and 80 percent of the foreign interns and 70 percent of the foreign residents were from developing countries. The drain from Asian nations, particularly Taiwan and Korea, is the most serious: it is estimated that over 90 percent of the Asian students who come here to study never return home. " 26
Those who came to the United States as advanced students came under foreign assistance programs; but they remain to fill in gaps of higher personnel that are not filled by the native products of the American school system.
England, which itself drains the Commonwealth countries of talent, is alarmed at the drain of its own physicians, surgeons and scientists to the United States. It is losing physicians and surgeons in the proportion of one-fifth to one-third of the graduates of its medical schools each year, some of them intensively trained specialists. 27
While the official unemployment rate hovers a little below 4 per cent and the extreme poverty rate around 25 per cent, the Department of Labor has advised that there are three million high-level jobs more or less permanently vacant in the country--for engineers, scientists, technicians, statisticians, administrators, nurses, physicians, teachers and the like. Neither the populace nor the educational system seems able to supply fully the needs of a technologically advanced system, partly because of native incapacity, partly because of educational shortsightedness and parsimony and partly because of low-level communal goals set by half-literate local community leaders and politicos.
Corporations, universities and government agencies compete madly with each other for well-schooled personnel. Local communities flounder and sink because men of informed judgment have been drawn away to distant points of the compass, leaving local Chamber of Commerce mentalities in charge.
These figures, true enough, can be interpreted in various ways. It can be said that technology has advanced so fast that it has left much of the population behind, breathless, which is strictly true. It can also be said that the population and communal institutions have not been adequate to meet rising needs, which is equally true.
Just as the level of educational attainment is not sufficient to meet the general needs of the time so, it is my argument, the level of educational attainment is not sufficient to meet the political needs of the people in selecting political personnel devoted to the needs of the nation. One gets instead the well-known variety of peanut politician, mainly exemplified at or near the top in streamlined hicks like Lyndon B. Johnson, Everett Dirksen, Orville Faubus and George C. Wallace, to name only a few of the currently most obtrusive and obnoxious. 28
As politics is the realm productive of public policy, the troubles of the country trace back inevitably to politics. Here we find largely inadequate officeholders chosen by largely inadequate people on the basis of largely irrelevant criteria, always allowing for the fact that a minority of the officeholders and a minority of the people are fully adequate to their responsibilities.
The democratic system thus comes full circle and in the United States presents a parody of itself on the governmental level. 29 As a consequence the entire land is officially plunged into Madison Avenue nonsense. The system, it turns out, has been infiltrated and subverted by boobocrats.
While institutional inadequacy is involved it is (contrary to a long line of radicals, liberals and plain democrats) by no means the whole story. Although many Americans above age twenty-five are inadequately educated and schooled, nobody at all is twisting their arms to make them remain that way. The major cities are all heavily supplied with public night schools on every level from the primary grades to university postgraduate
levels and anybody may rectify his educational defects very readily, usually free of direct charge. Some do; most don't. Again, most of the major cities have excellent libraries, very lightly patronized.
Where the interests of the broad public he may be discerned on any weekend when they hit the roads in their cars. While this aimless driving about on superb highways may be cosmically innocent, like praying, it is not done by a populace seriously concerned about its destiny. It is done, in fact, by handicapped boobs.
The Market Place
What we have before us is an operative and a formal political-legal system. The latter, it should be perfectly understood, is quite well devised to respond in an orderly, systematic way to the collective will of the populace.
The operative system, the real system--control by corporation--subsidized politicians--quickly came into being and prevailed owing simply to the inability of the electorate to understand and use properly the system offered. This electorate consisted almost entirely of rustic Anglo-Saxon and Scotch-Irish hinds and, in the course of time, largely illiterate continental European immigrants.
With the spread of the popular franchise after 1830 the system decreasingly elevated characters like George Washington, John Adams, Thomas Jefferson and James Madison, the choices of an educated landed and mercantile enfranchised political elite, and instead pushed up from the soil confused Jacksons, Van Burens, Buchanans, Grants, McKinleys and more recently Hardings, Coolidges, Eisenhowers, Johnsons et al. The trend was even more marked on the lower levels and only exceptionally did men of genuine political grasp make their way upward. Many of this order simply did not make it and turned away from politics.
The operative system that came into being, then, was a reflex to popular rather than institutional inadequacy, an important distinction. It is the Marxist idea that all social evil is traceable to existing institutions. I deny this although I do not deny that existing institutions are often influences toward evil, especially as these institutions are distorted under usage. Beautiful parks are despoiled by ordinary people misusing them, not by their managers. 30
In glancing at the market place, it will be observed that what is chiefly criticizable about it is that much of it, as in "democratic" politics, represents a genuine adjustment to the low-level understanding and goals of much of its public, the customers. It is also true, however, that much of this market place simply ignores the customer, the public, and goes about blithely frying its fish in its own way, as in the establishment of monopoly arrangements. In many ways the market and its institutions, as it turns out, pointedly do not exist to serve the public; the public exists to serve the market, to facilitate its operation. 31
The American economist Thorstein Veblen developed the concept of economic surplus, most recently employed by the neo-Marxists Baran and Sweezy in computing it (for the first time) for 1929-63. It was Veblen's contention in The Theory of Business Enterprise and The Theory of the Leisure Class that much, perhaps most, of this surplus was wasted, purposely and conscientiously, so that it could not be used to improve institutions or the life of the people as a whole. The argument was: Capitalism establishes monopolies and uses advanced technology in order to increase surplus to a certain point and then wastes much or most of this surplus in order not to alter the necessary conditions for generating such surplus. Instead of operating to uplift and improve everybody and ameliorate the conditions of life, thus altering institutions, it
was held it operated to keep everybody right where he was, which meant that the rich became richer and the poor remained poor or meagerly sustained.
The economic surplus, specifically, is the difference between what a society produces and the cost of producing it. The larger the surplus the more a society has to dispose of in various ways of its theoretical choice.
As derived by Baran and Sweezy with the assistance of Joseph D. Phillips from orthodox official data, since 1929 the American surplus has ranged from a low of 40. 4 per cent of gross national product in 1934 to a high of 71. 6 per cent in 1943; it stood at 56. 1 per cent in 1963. It stood at 46. 9 per cent in 1929 and has shown a definite tendency to rise over the decades. As estimates are used even in some of the official government figures employed, there is room for error. But even if error went as high as 10 per cent, or even 15 per cent, either way, the computations would be broadly indicative.
The major components of the surplus for 1963, for example, were as follows: 32
Total property income
(Corporate and noncorporate income, rents,
interest, profit component of corporate
officers, etc. )
Waste in distribution (sales effort, trade
advertising, etc. )
Nontrade corporate advertising
$104,618,000,000
Surplus employees' compensation
(Finance, insurance, realty and legal services,
which last cost only $870 million)
Absorbed by government
Total surplus
Percentage of Gross National Product
168,008,000,000
$327,725,000,000
56. 1
The direct return to property, then (out of gross national product of $589. 2 billions- plus), amounted to more than 17 per cent, which accrued in all to not much more than 10 per cent of the populace by any reckoning and was concentrated most heavily in a thin upper level of this 10 per cent. With respect to the surplus itself, the take of property was nearly 30 per cent.
Waste in the Business Process
The components of waste in the business process shown in the Baran-Sweezy computation consist of expenditures for advertising, market research, expense-account entertaining, maintaining an excessive number of sales outlets, public relations and lobbying, salaries and bonuses of salesmen, maintenance of showy office buildings and business litigation. None of this adds anything to the value or utility of what is produced. 33
There would be an element of waste in any system, but the argument here is that the waste under capitalism is institutionally determined in order to maintain capitalism itself rather than a high quality of social life. It does no good to argue with a Moscow- oriented Marxist that there is as much or more waste and irrationality in the Soviet system, because the defensive answer here would be that the Russian system was not an outgrowth of capitalism, as Marx stipulated that socialism should be, but is an originally backward system that must pass through a capitalist phase of labor exploitation and the
29,749,000,000
7,700,000,000
17,650,000,000
like in order to establish an industrial base for socialism, which is something that will be ushered into being in due course. Those who believe this, in view of the rise of a Soviet vested political bureaucracy, must draw upon whatever credulity they possess. My own view with respect both to capitalism and to sovietism is: There is no Santa Claus. Under whichever system one has, workers, it seems, will work and administrators will administer, on terms more or less unequal in all cases unless administrators deliberately choose to play fair.
As to advertising, it is recognized by many economists of repute as an uneconomic aberration, introduced by corporations as a substitute for competitive pricing. The advertisements create the illusion of product differentiation among large varieties of essentially identical products. These essentially identical products are, it is true, differently styled and packaged but in most cases the "talking points" are irrelevant.
Economists agree that the ultimate consumer pays for the advertising which in turn defeats the ultimate consumer in his search for lower prices, maintains monopoly prices. The worst thing that can happen in the system, in the view of its managers, is price- cutting, which reduces surplus.
Continual advertising itself, by its overwhelming success, in some cases leads to a virtual monopoly of some products--for example, the Gillette among the wet-shave safety razors.
As the gilt-edged economist E. H. Chamberlin observed, "selling methods which play upon the buyer's susceptibilities, which use against him [my emphasis] laws of psychology with which he is unfamiliar and therefore against which he cannot defend himself, which frighten or flatter or disarm him--all of these have nothing to do with his knowledge. They are not informative; they are manipulative. They create a new scheme of wants by rearranging his motives. " 34
"Madison Avenue" has come in for a great deal of condemnation. It should be observed, however, that the irrational extravagances of advertising could not be employed if there were not a vast public unable to see through the transparently deceptive devices used. It is public response that sustains advertising.
It is not that the advertisements are false in general, although false advertisements, advancing direct claims that can be disproven, have been found in abundance by the Federal Trade Commission. But, even though not false, the advertisements are almost invariably grossly misleading. They are vague, ambiguous, irrelevant and often absolutely nonsensical. By freely using improper techniques, advertising effectively subverts the work of the schools in teaching the proper uses of language and clarity in thinking. The multitudes of handicapped are intellectually defenseless when they come to advertising, and the process of absorbing the nonsense of the free-ranging advertisers intensifies their intellectual handicap. Many people talk and think about the world the way Madison Avenue has vividly but zanily taught them. 35
The logic of Madison Avenue is to employ language and pictures irrationally with a rational view to selling price-fixed goods and making money. It is able to do this because it carefully exploits human weakness--suggestibility and ignorance. In saying this, nothing is said about products or their quality--another story.
Reinvestment of Surplus
Whatever property owners do not consume or allocate to various self-serving nonprofit purposes they reinvest. Such reinvestment may be in already established areas or in new areas: new industries or foreign lands. Precisely what the propertied element consumes cannot be directly computed. Small property holders probably consume most
of their income. In the case of large property holders, income cannot be consumed without resorting to colossal extravagances such as the maintenance of six large homes.
What is left for consumption and personal reinvestment one may obtain some glimpse of by taking account what is reinvested by corporations. In 1962, as Baran and Sweezy show, expenditures of surplus by nonfinancial corporations for research and development totaled $12 billion and for outlays on plant and equipment $32 billion, of which a fantastic 81. 9 per cent was greedily charged as depreciation. Since 1953 the totals for research and development, plant outlays and abnormally exaggerated depreciation had climbed steadily and phenomenally. There was, thus, $48 billion reinvested out of total property income for the year of $99. 2 billion, or nearly half.
There was, furthermore, the item of foreign investment, possibly not more than half of which represented actual flow of capital from the United States. The total of direct foreign investments increased from $11. 8 billion in 1950 to $40. 6 billion in 1963, an increase of $28. 8 billion, according to official figures. Between 1950 and 1956 such investment each year ranged from half to three-quarters billion but thereafter in each year has usually far exceeded $1 billion and in 1957 exceeded $2 billion. It therefore seems safe to say that on the average at least half of property income is usually reinvested, with the proportions of what is reinvested increasing as one moves up the scale of property holders in point of individual magnitude. In general, the invested position of the propertied is steadily improving. Foreign investment is far more lucrative than domestic and the quest for foreign markets is what enables American industry to bypass in so many ways its own population.
Some of the approximate $50 billion that was left over may also have been reinvested as new personal investments. In any event, the property owners in that year had some $50 billion of unearned income at their personal disposition, roughly equivalent to the sum absorbed by the armed forces.
Yet, as Baran and Sweezy remark, the monopoly system tends to work at cross purposes with itself.
It tends to generate ever more surplus, yet it fails to provide the consumption and investment outlets required for the absorption of a rising surplus and hence for the smooth working of the system. Since surplus which cannot be absorbed will not be produced, it follows that the normal state of the monopoly capitalist economy is stagnation. With a given stock of capital and a given cost and price structure, the system's operating rate cannot rise above the point at which the amount of surplus produced can find the necessary outlets. And this means chronic underutilization of available human and material resources. Or, to put the point in slightly different terms, the system must operate at a point low enough on its profitability schedule not to generate more surplus than can be absorbed. 36
Compensation for surplus or intermediary employees, as Baran and Sweezy admit, would exist in any system; but it is their argument, for which they cite good reasons, that under the American system much of it is excessive and wasteful. The intermediation of brokers and agents adds nothing to the value of products. A real estate or stock broker, for example, may mediate the sale of the same property many times a year, drawing a commission each time. Nothing new has been added.
Government Absorption of Surplus
The largest absorption of the surplus of the highly productive American system, however, takes place through government. Here, as official data show, absorption of surplus has risen steadily from $10. 2 billion in 1929 to the level of $168 billion in 1963. Here is the statistical basis for the cry of statism against the welfare-warfare-subsidy
state. From 1929 to 1961 government spending steadily rose from 9. 8 per cent to 28. 8 per cent of gross national product. 37
It is common knowledge that some of government expenditure by anybody's standards represents waste, expenditure for socially unnecessary ends. The common notion of the congressional "pork barrel," with respect to which congressmen trade votes in order to get unnecessary expensive projects for their districts, supports the notion. The local folks are pleased but are postoffices in the form of Greek temples and colonial mansions necessary? Are various airfields and army posts necessary? Governmental absorption and spending of surplus, however, whether wasteful or not, "pumps" money back into the economy. The government, thus--local, state and federal--is the biggest customer in the marketplace and, if it considerably reduced or withdrew its patronage, the so-called private enterprise economic system would almost instantly collapse. By running Keynesian deficits it can push the economy ahead. By curtailing expenditures it can depress the whole structure.
Despite the outcries against statism, it has been mainly for the military establishment that government demands on the economy have been made. Whereas in 1929 less than 1 per cent of gross national product was devoted to military purposes, by 1957 it had risen to more than 10 per cent and accounted for approximately two-thirds of the aggregate expansion of all government spending. Government spending, then, is largely military spending.
Which government expenditures are socially necessary or sustaining and which are waste of surplus? We know already there is some waste, by common agreement; the question is only to determine how much there is, a difficult if not impossible task.
Whereas nondefense or civilian expenditures by government increased only from 7. 5 per cent of gross national product in 1929 to 9. 2 per cent in 1957, the military proportion increased by fifteen times. Transfer payments increased from 1. 6 per cent to 5. 9 per cent, less than four times. 38 Transfer payments comprise interest on government debt, subsidies minus surpluses of government enterprises, veterans' allowances, old- age pensions, unemployment benefits and the like.
Although some argue that military spending is not a prop to the economy and contend despite the 1930's that there would not be a depression if military spending were reduced (because with the reduction in military expenses there would presumably be a corresponding reduction in taxes and a compensating rise in private spending or in redundant investment), it seems inescapable that no scattered private spending or investment could replace the massive concentrated military effort which currently takes more than three million men out of the labor force and makes an effective demand for more than 10 per cent of the production of the labor force.
Instead of military spending, others argue, there could be an increase in socially necessary civilian spending as for hospitals, schools, sanatoria, playgrounds, health resorts, community centers, galleries, museums, lecture halls, libraries, public housing and the like. While such creations would indeed absorb surplus at as great a rate as one liked they would, clearly, be "socialistic. " Such a civilian creation by government would in many directions, as in housing, medicine and other areas, conflict with profit enterprises and by supplying libraries, museums, lecture halls, playgrounds and the like would provide alternate uses for the free time of people, to the possible detriment of profit enterprises like TV, movies, automobiles and so on. All this is precisely what is not wanted by the vested interests who exert decisive political leverage. But if there were effective political leadership, overswollen military budgets could be trimmed for these domestic purposes.
Merely to staff a great expansion in such socially useful facilities would require the diversion of much upper-level personnel from profit-making enterprises.
Some percentage of the military establishment, by the testimony of all schools of thought, represents waste. Some of it is necessary waste, arising from unavoidable circumstances; some is avoidable waste. There are, again, those who would argue that, humanly speaking, it is all waste; we need not follow this line of thought in a highly imperfect world. Owing to continual technological advance, moreover, there is rapid obsolescence of much military equipment in a situation where it is felt, hysterically, that the nation must be prepared at any moment for a maximum military effort to save its very life.
Large portions of civilian outlay by government can also readily be interpreted as waste. The federal roadbuilding program, as indicated in Note 28, supra, is considered (I think rightly) a huge example of compounding social waste by Baran and Sweezy, who also interpret slum clearance as in good part a waste of public money. This last item of waste comes about in this way: Instead of utilizing low-cost open spaces, readily available, the slum-clearing programs buy up deteriorated properties at good prices to the owners and then supply contractor-promoters with huge sums and excessive tax rebates to construct new buildings that rent at such prices as to bar slum dwellers. Slum clearance thus becomes indirectly subsidized luxury building, a delight to politicians, many of them participants in the building syndicates.
Government expenditures for schools and hospitals, health and sanitary measures (water supply, sewage and garbage removal), conservation and recreation, housing and facilitation of commerce, police and fire protection, courts and prisons, legislatures and administrative offices are conceded by these writers to be socially necessary. Presumably they would agree that libraries, post offices, government printing and the maintenance of rivers and harbors are in the same category. But, as they point out, there has been little expansion of such services relative to the expansion of gross national product. Most expansion of governmental spending and allocation of funds has been in areas that are more or less, or entirely, socially and economically wasteful or rationally questionable.
Thus, while socially necessary services are skimped and held down with cries for "economy in government," the sluice gates are wide open for the military in repelling a Leninist communism held to be lapping at distant shores and in underwriting schemes of roadbuilding and urban renewal that not only facilitate huge profit-making enterprises but undermine those that are socially more efficient such as railroads.
In general, what Baran and Sweezy say here is true. The stake of property is steadily being increased under the camouflage of high depreciation write-offs. Persuasive advertising is wasteful and exploitative of credulity, a substitute for genuine competition. More surplus employees are utilized than is socially necessary, although not more than this kind of system requires. Much of what the government spends is indeed wasteful in various degrees and from various points of view and much of it, as in the approach to housing and the automobile complex, is positively harmful. In this last category we have, not merely social waste for profit, but positive, certifiable social harm for profit. Beyond the harm produced by the approaches of public policy to urban housing and the automobile complex there is the harm induced by misallocation of resources, as in military overspending for Over-Kill.
The prime virtue of capitalism in theory is that it provides a mechanism--the ostensible free market--for meeting the effective varied demands of people at the best prices. What happens, however, when people are deviously induced to make an effective demand for something they do not need (automobiles instead of houses) or
something that will not meet some need (chewing gum instead of psychotherapy) is not embraced in the theory. People must know their need and how to satisfy it. Again, if the market is under monopoly, people cannot make effective demand at the best possible prices even for things they do not need--things that do not cater to necessity, convenience or comfort. Ideas of spurious need are inculcated by playing upon latent fears, such as that other people will ostracize them if they do not use deodorants and a long line of other products. Advertising, seen in this aspect, is obviously a vast booby trap, a legally condoned swindle for profit. 39
Quality in the Consumer Economy
As to the quality of goods in the Consumer Economy, where consumption in and of itself is regarded by many public men as the remedy for all ills, there is a wide range. In order to appeal to the impecunious, much of what is offered is sleazy, saturated with built-in obsolescence. The case made by Ralph Nader about the Detroit automobile could in general be applied to many products, although in the automobile it was more serious than usual owing to the immediate life-and-death aspect. 40
In order that at least the more literate portions of the middle classes may pick their way about among a large variety of substandard, overpriced and absolutely unnecessary products that cater at most to free-floating anxiety and suppressed restiveness, there have emerged successful private enterprises such as Consumer's Union and Consumer's Research. By means of regular reports these organizations, and others, advise subscribers of the results of product analysis and price comparison.
Strong in the production of capital goods (generally machinery designed for further production), the American productive system in the line of consumer offerings is about as uneven as the American school system. The main consideration all along the line is admittedly the rate of profit. Producers, it must be conceded, are entitled to fair returns for effort, but the object of business enterprise in general and of the American business system in all its parts is to obtain maximum possible return without regard for quality or social necessity, comfort or convenience. Do-nothing products, economic placebos, are quite common. Under the rubric of glorious freedom, if they make a big profit through misleading advertising as in the case of deodorants, they are justified. The vendor has given the customer what he has been frightened or cajoled into wanting and has given employment perhaps to thousands who are raising children to grow into another army of worker-consumers making null or below-par products--all, however, for somebody's profit.
Many products in the market, especially in pharmaceuticals and foods, are repeatedly found in government laboratories to be positively harmful. This is a long story in itself.
Just how little fear of authority producers feel under the skull-and-crossbones of freedom we learn from Admiral Hyman G. Rickover, of the Bureau of Ships of the Navy and known as "The Father of the Atomic Submarine," a really competent man. Rickover announced that work on many atomic submarines was being delayed because parts, upon which performance depended, were being delivered that did not follow specifications. He cited "the inability of American industry to meet the exacting demands for quality and reliability posed by modem technology. " and charged that industrialists did not know what went on in their plants, which were left to administrators chiefly interested in getting more contracts. The National Aeronautics and Space Administration at the same time voiced similar complaints, which it later smothered in a tribute to the cooperation of industry. Rickover not only held to his position but has many times made it known in the same terms. 41 The deaths of three astronauts were ascribed to poor equipment.
Not all officials react disagreeably to treating the government as though it was a rank- and-file customer. The political authorities of Massachusetts, for example, accepted the Massachusetts Turnpike as constructed. Soon after completion the road was already crumbling over long stretches and was being extensively rebuilt. As one who has driven over this road many times and experienced its undulations, seen it pitted with holes and watched repair crews at work over its entire length, I can personally testify to its generally poor condition, especially as contrasted with the New York State Thruway, with which it connects. As soon as one travels on to the New York State road from the Massachusetts road one is aware of a dramatic transition from uncertainty and hazard to a well-engineered, well-built road. The ancient Romans built roads that are still used for heavy-duty purposes.
A very wide range of consumer goods conforms more to the standards of the Massachusetts Turnpike than to the New York State Thruway, all produced under the pressing motivation of a quest for maximum profits. Cheap goods, perhaps not paradoxically, are often socially expensive goods.
Institutions or People
'The full-blown Marxist will have no difficulty putting his finger on the difficulty. He will say it is capitalism, or monopoly capitalism. With this convenient analytical abstraction, I do not agree.
Capitalist institutions, being oriented toward private profit in return for the commitment of private capital, no doubt facilitate and reinforce inherent selfish drives in the acquisitive-minded, encourage corner-cutting. It is part of self-serving capitalist theory that the driving self-interest of the entrepreneur indirectly serves society, with an invisible hand conferring benefits out of the process. Up to a point this may be true, or it may once under competitive conditions have come nearer the truth than it is under monopoly conditions. But as the screws are rationally tightened to generate more and more profits, more and more surplus, the gains in the productive sector of the economy are increasingly made at the expense of the consuming sector. And social welfare lies at least as much as or more in the consuming sector than in the producing sector. Production is merely the means, consumption the end. In dominant American thinking, this order is reversed, Again, much of what is termed capitalism has been simple illegality, outside the system.
If the general public were as rational as the producers and had at its fingertips as much knowledge and insight, and ability to apply knowledge and insight, all would perhaps be well. But a very large section of the public, a majority, is woefully handicapped through the possession of insufficient rationality, knowledge and insight. Its members are as amateur participants in a card game with experts. Not only are the politico-economic adversaries of the broad public highly expert but they are what is known among card players as sharpers, prone to violate the rules. These sharpers play a cooperative game with marked cards. Not only this but to some extent they are mind readers. Armed with a knowledge of psychological laws and backed up by computer technology, the large- scale entrepreneur knows in advance what plays the amateurs in elections and markets are bound to make. The amateurs, in fact, are inherently restricted in the plays they are able to make in their own defense. Even if they were pantologists they would not be able to make better choices than a mass-oriented monopoly market and complex political system offer.
In the selection and purchase of goods and services, the disorganized public is led in some cases by necessity, in others by the quest for convenience and comfort and, at times, by the attraction of dispensable diversion and luxury. Beyond these ends it may, too, as advertisers well realize, be led by the prospect of purely imaginary and illusory
advantages, as that ladies will become intensely amorous at the sight of men who use certain pomades.
By Way of Summation
The cleverness of the rich, as I see it, has consisted largely of the fact that the acquisitors among them have been able to operate practically unhindered by law among multitudes of thoroughly confused people, who are readily victimized in politics and economics. The victims have at all times been left externally free to choose in their own way. The rich, whether they knew it or not, could always have been fortified in the thought that the handicapped will usually make the wrong choices under the rule of external freedom.
Approached from the standpoint either of IQ or formal education, far more than half the population has not had the knowledge, intelligence or ability to make choices in its own interests. It has merely drifted with the tide, trusting to its feelings, while others gathered in the hay. Nobody in most instances twisted the arms of this population to make it perform as it did in the polling booth and the market; on the other hand, rescue parties have been few and have not been understood as such by the victims, who regarded saviors such as Mrs. Sanger as enemies. A whole line of would-be saviors, including socialists such as Norman Thomas, have been rotten-egged for taking the trouble to make known their panaceas to this same population. Left and right, radicals, reformers, liberals and labor organizers have been bustled off to jails, not usually by capitalists or even by capitalist agents, but by the local rank and file of victims and their duly elected officers.
Underlying the low IQs and faulty education have been deliberately contrived cultural deprivation as in the case of Negroes and spontaneous, self-induced cultural deprivation as in the case of rural and small-town Protestants and urban Catholics. These, it is evident, have been self-designated victims in a game with rules the rank-and-file did not understand.
What is evidently the case is that a large section of the population is dependent- emotionally, intellectually, economically and politically--and is unable inherently or by conditioning to function in its own behalf under free institutions. A large section of the population, indeed, if it is to be properly served, should be regarded as public wards, ethically subject to rather close highly informed benign guidance in making life dispositions. No doubt much of this dependency arises from its conditioning, from its unreasonably inculcated faith that provision will be made for it, if not by man then by some remote deity.
