This is a non political blog. Provocative commentary regarding the convergence of the economic and political – which I call “econopolitical commentary” – is presented in a non partisan way.

The Eco-political Origins of the “Great Recession”

Our analysis begins with an excerpt from George Orwell’s “1984” parodying political marketingspeak of today, adopted by both political parties:

“The Ministry of Truth…was an enormous pyramidal structure of glittering white concrete, soaring up, terrace after terrace, 300 metres into the air. From where Winston stood it was just possible to read, picked out on its white face in elegant lettering, the three slogans of the Party [shown on the right:]

1984 is an allegory. The mechanisms of thought and income suppression in today’s America, while systematic and real, differ in detail from that portrayed in Orwell’s novel. The divide and conquer two party system, in which 2 basic human philosophical inclinations are used against one another is a more realistic method of control than the ham fisted authoritarian one envisioned by Orwell – but every bit as effective and crushing as “The Ministry of Truth.” Worse yet than the loss of individual freedoms, is the erosion of the quality of life for the middle class.

How the Allegory Fits Today’s Economy

“1984” portrays a dark prophesy of a techno-managerial authoritarian order in which “the Party” floods its subjects with psychological stimuli designed to overwhelm the mind’s ability for independent thought.  What exactly are the lessons for today?

Bear in mind that Orwell decried literalist interpretations of his prophetic fantasy.  One common mistake is to interpret it in a partisan way. But “Big Brother” isn’t the government; it’s the corporation (which ultimately funds, manages and communicates government policy.)

“Big Brother” = Big Business

Lewis Powell Jr. the Father of “Big Brother”

Specifically, “Big Brother” is an alliance of Big Business interests first organized by Nixon Supreme Court appointee Lewis F. Powell, Jr., the granddaddy of the modern American plutocracy, in his insidious legal agenda that has inexorably chipped away at the constitutional rights and protections of individual citizens through a spate of law suits waged across the country. The full history of the establishment of corporate personhood is given here. The real power of Judicial Activism has been effectively concealed behind the public facade of executive and legislative politics.

Corporations More Equal Than Individuals

The strategy of “corporate personhood” is summarized in another of Orwell’s novels, “Animal Farm” under the rubric of “All animals are equal, but some are more equal than others.”

“One day, [the pig] Squealer takes the sheep off to a remote spot to teach them a new chant…The animals gaze in amazement at Squealer walking toward them on his hind legs. Napoleon soon appears as well, walking upright; worse, he carries a whip. Before the other animals have a chance to react to the change, the sheep begin to chant, as if on cue: “Four legs good, two legs better!” Clover, whose eyes are failing in her old age, asks Benjamin to read the writing on the barn wall where the Seven Commandments were originally inscribed. Only the last commandment remains: “all animals are equal.” However, it now carries an addition: “but some animals are more equal than others.”

…One day, the pigs invite neighboring human farmers over to inspect Animal Farm. The farmers praise the pigs and express, in diplomatic language, their regret for past “misunderstandings.” The other animals, led by Clover, watch through a window as Mr. Pilkington and Napoleon toast each other, and Mr. Pilkington declares that the farmers share a problem with the pigs: “If you have your lower animals to contend with,” he says, “we have our lower classes!”

Mr. Pilkington notes with appreciation that the pigs have found ways to make Animal Farm’s animals work harder and on less food than any other group of farm animals in the county. He adds that he looks forward to introducing these advances on his own farm. Napoleon replies by reassuring his human guests that the pigs never wanted anything other than to conduct business peacefully with their human neighbors and that they have taken steps to further that goal…

…The animals, watching through the window, realize with a start that, as they look around the room of the farmhouse, they can no longer distinguish which of the cardplayers are pigs and which are human beings.”

The highlighted sections of the passage above illustrates the evolution of democracy into a plutocracy, which is every bit as clear as the former devolution of Communism into totalitarianism. No mistaking that the two legged animal is the Corporation that has attained personhood, and superior rights to the individual, whereas the four-legged animals, the workhorses that drive production and consumption are considerably less equal. The United States’ constitutional democracy has morphed into a pyramidal eco-social structure in which Big Capital wields the whip over labor, as the sheep cheer it on.

Ironically, it has led the economic system to the brink of collapse, known as the “Great Recession.” How exactly did this occur?

The Rise of the Middle Class

The rise of the US middle class after The Great Depression corresponds with the rise of labor unions, government checks on the influence of big business interests, and social welfare programs – all of which put purchasing power into the hands of American workers, elevating their standards of living while strengthening business as well. Growing income equity benefited everyone. In other words:

  • Income equity is the tide that raises all ships

The Fall of the Middle Class

Since 1980, workers have received a diminishing share of the fruits of their labor. Before 1980, when manufacturing sector unions represented mover than 35% of manufacturing workers, the growth of worker compensation in the manufacturing sector tracked and even modestly exceeded the growth in worker productivity. But after about 1980, as manufacturing union density plummeted due to union busting during the Reagan Administration, the lines diverged. In the last 10 years, while productivity has risen by about 20%, worker compensation has barely increased. Today, virtually all additional profits gained from productivity improvements go into corporate coffers and not into workers’ pockets.

  • Wages as a share of national income have fallen precipitously to near its lowest in history, while compensation (including pensions and health benefits) has fallen by about 10%.
  • During the same period the unemployment rate more than doubled, and has only recently fallen below 10%.
  • Yet corporate profits are soaring – at their highest level in 40 years.
  • In 2010, the private sector earned about $1.7 trillion in profits and 200 US corporations captured almost a third of those profits.
  • US corporations are currently sitting on over $2 trillion in cash right now, much of which is being used to acquire other corporations rather than to invest in new jobs.
  • In the last 32 years, as union membership has rapidly declined, the income of the wealthiest 5% of families has grown eight times faster than the income of the bottom 20%.

The US is 5th in the World in Income Inequality

From 1913 to 1929, when unions were weak, income inequality in the US soared. As union membership swelled after the mid 1930s the gap between rich and poor narrowed, through the early 1970s. And then, union membership plummeted and income inequality levels  rose rapidly, and have today returned to 1929 levels.

Income Inequality Pushing the Economy to the Brink

The forces that resulted in greater income equality made the US an economic juggernaut. The forces that consolidated income and wealth in the hands of fewer Americans has led to a system that is no longer viable and sustainable.

Are There No Solutions?

It is indeed interesting that there is a growing public skepticism about the possibility of a political solution in a supposed democracy. It’s an acknowledgment that George Orwell’s vision has come to pass. In a much-talked-about talk on income inequality, Nick Hanauer clarifies that public policy has created the situation and can reverse it. Still, the lack of viable representation is clear. There is no one who can stand up to “Big Brother.”

There are solutions.  Tax policy is just one lever that could help restore the balance, in the form of a much more steeply progressive tax. Campaign finance reform is part of the picture. Economists say that a real key to regaining lost ground for the middle class, is cultivating large numbers of jobs in new and growing industries like green technology and health care, and providing unfettered access to higher education so middle- and lower-income Americans can train for these careers.

“What we need is a policy conducive to innovation and entrepreneurship,” said Will Marshall, president of the Progressive Policy Institute, a think tank. “You need the energy of invention just as we saw in the late 90s. We need another spurt of innovation-fueled growth.” That is to say that a policy of growth that resists calls for austerity is vital to the solution.

The bottom line is that this is a war that needs to be fought on several fronts to undo the endemic corruption that has been created by Corporate Personhood. As long as the Corporate Lobby controls the agenda, the economic disparity will continue to grow, and all ships will go down.