PLENARY TALK, RETHINKING MARXISM CONFERENCE University of Massachusetts-Amherst, September 23, 2000 by Doug Henwood
It's a bit intimidating to be here. I'm used to speaking to thousands on the radio, but at least you can't see your audience drifting off to sleep or lunging for the tuner. It's also more than a bit intimidating to step into Mike Davis' shoes on short notice, and it's more than a bit awesome to share a stage with Angela Davis. But I'll do my geeky best under the circumstances.
The assigned topic is (Re)turns to class, though I'm never sure how to pronounce those tricky parentheses. I suppose the prefix is meant to imply that people who pledge some allegiance to Marxism need to get back in touch with one of its distinguishing obsessions; without the prefix, it's an recommendation to those outside the Marxian tradition to take a look at the concept. The implication to me is that radical social analysts have spent the last two decades or so thinking mostly about things other than class -- race and ethnicity, gender and sex -- and it's time to return to thinking about class, wiser for all the thinking about things other than class. Or, as Kim Moody said in a piece in New Left Review a few years ago, comparing the present with the 1930s, we have the potential to do class right this time.
Which leads me to a bit of a personal confession, ex-Catholic that I am. I used to be one of those hardasses who thought that there was just too much attention being paid to peripheral matters, like discourse and desire, and not enough to things like money (as if money were unrelated to discourse and desire). I'm not one of those hardasses anymore -- much to the irritation of some unreconstructed hardasses, whose complaints are easily found on the Internet. The softening process started at the last Rethinking Marxism conference 4 years ago -- during Judith Butler's plenary talk in fact, which eventually found its way into print as "Merely Cultural." So I'd like to thank the organizers of that conference for inspiring a little rethinking of what I thought was Marxism.
Having said that I wish I could launch into some grand synthetic rant -- an interrogation, maybe, of the phrase "queer as a $3 bill" -- but I had to slap this together on very short notice, which means exploiting my current preoccupations, specifically a book I'm finishing up, A New Economy?, to appear real soon now from Verso. (There's a question mark at the end of the title, just in case my inflection didn't make that clear.)
You can hardly open a newspaper or turn on the TV (well, at least tuned to certain channels) without hearing about a wondrous New Economy. (Though it's sobering to learn that, according to a Scudder Kemper Investments poll, over 80% of Americans have neither heard nor read of a New Economy.) The canonical version is relentlessly, almost deliriously optimistic. It goes something like this. Finally, after a long wait, the computer revolution is paying off economically. It used to be, as the economist Robert Solow famously put it, that that revolution was visible everywhere but in the statistics. Now, with U.S. productivity stats surging forward, Solow's quip has to be retired. It took some time for people and organizations to learn how to use computers (broadly defined, of course, to include all kinds of high-tech electronic gadgetry), but now they've finally learned. All that hardware, now linked from local area networks to the global Internet, along with a political regime of smaller government and lighter regulation, has unleashed forces of innovation and wealth creation like the world has never known before. Flatter hierarchies and more interesting work are the social payoffs; rising incomes and an end to slumps the economic payoffs. Quality replaces quantity, knowledge replaces physical capital, and networks replace hierarchies.
The portion of the New Economy discourse that's relevant to Marxism, and specifically to this panel, is that it's appropriated a lot of rhetoric about revolution, about the overturning of hierarchies, and about the democratization of ownership and the workplace that used to be staples of radical politics. At the same time, though, New Economy rhetoric also rejects a lot of the old Marxian catechism: we're now post-material; scarcity is waning as a social force; in an age of endlessly and almost costlessly reproducible goods like software and movies, ownership too is waning as a social force; physical capital doesn't matter anymore, because knowledge, as everyone from George Gilder to Manuel Castells could tell you, is what matters, not things; and place doesn't matter much anymore, as long as you have a cell phone and a net connection. Obviously I am extremely skeptical about almost all these claims, or I wouldn't have a book to write.
One of my favorite New Era celebrants is an NYU accounting professor named Baruch Lev. (One thing that makes him a nice target is that he's not a mere journalist, like me, but a professor at a brand-name business school.) Lev argues that his 500-year old discipline is simply inadequate to the ineffable glories of 21st century capitalism. Today, knowledge, not things, rule. That's a fashionable point of view that assumes our ancestors were dolts, as if the wheel and the power loom weren't productive embodiments of knowledge. Things get interesting when Lev gets specific. One of my favorites -- others are detailed in the book -- is his idea that accountancy undervalues "assets that are associated with a company's brand, which let a company sell its products or services at a higher price than its competitors." This is a version of one of the cornerstones of New Paradigm thinking is the curious doctrine that "brand equity" -- the financial value that stock markets assign to names like Nike and Mickey Mouse -- is a kind of capital, like a lathe or even a piece of software. It's easy to see how even privately held assets of that more conventional sort can contribute to social wealth; unless they belong to a bomb factory, their produce can make people better off (even if the profits they generate are appropriated by a handful of managers and shareholders).
But a "brand," as Naomi Klein puts it in her excellent book No Logo, is a kind of "collective hallucination." Nike may gain from selling shoes at $150 that cost a few dollars to make -- as do its ad agencies and the media where it plasters its swoosh and Michael Jordan for hawking his branded shoes -- but it's hard to see how society as a whole does. (I'm leaving aside the fact that there are actual workers who make the swoosh-festooned shoes who simply disappear in the New Paradigm analysis; just because a commodity is hyper-fetishized doesn't mean there are no human toilers lurking behind it.) Nike's gain from its brand mystique is simply other vendors' loss.
Lev has some more curious ideas, the most curious perhaps being that accounting is far too fixated on the "transaction," the exchange of money for a good or service. Rejecting several centuries of capitalist history in which the sale of a commodity for more money than it took to produce it -- profit -- was the system's reason for being, Lev argues instead that in the New Economy, value is created in far more ineffable ways.
"When a drug passes its clinical tests, huge value is created -- but there's no transaction. Nothing changes hands. Nobody buys anything and nobody sells anything. When software passes a beta-test, it suddenly becomes valuable -- but there's no transaction. Or think about how value is destroyed: When a big, old company is late in figuring out how to enter the world of e-commerce, huge value is destroyed -- but there's no transaction."
Lev is speaking here from the point of view of the stock market, which is what creates or destroys "value" by these criteria. But what he seems to forget is that these movements of value anticipate transactions: the new drug, or the new piece of software, is valuable only because it will result in future sales. If no one buys these products, the value is illusory. So too the destruction of value; if the lumbering behemoth is slow with its website, it only matters if it loses sales to nimbler competitors. It's hard to see how even the most advanced outpost of the New Economy can leave the transaction behind forever. For now, investors may be willing to buy the stocks of dot.com's whose prospectuses promise years of vast and expanding losses -- and we've seen, after the carnage in dot.com stocks over the last half-year, that that indulgence had a fixed, if surprisingly long, lifespan.
New Economy thinking is inseparable from the bull market; it's both its intellectual byproduct and retrospective justification. Not to pick on Lev -- though he's an irresistible target -- but the relation is nicely illustrated by his claim that since the market value of the companies in the Standard & Poor's 500 index was7 the firms' book value, "in the U.S., knowledge assets account for six (!) of every seven dollars of corporate market value" (exclamation point in original). So, you see, knowledge assets drive the New Economy. How do we know this? Because the stock market tells us so. How do we know the stock market is right? Well, it just is.
A historical look at Lev's measure of corporate America's IQ from 1945 through 1998 makes for remarkable reading. By that measure, corporate America got three times smarter -- or more knowledgeable, take your pick -- from 1948 through 1968, then came down with a serious bout of idiocy -- or ignorance -- between 1968 and 1981 (maybe it was all the drugs), only to recover during the Reagan years (maybe it was Ron's personal example), and then achieve unprecedented levels of genius in the 1990s. Indeed, corporate America's brainpower tripled between 1990 and 1998. Truly these are wondrous times.
Lev makes a juicy target, but you hear lots of uncomfortably similar stuff on the left. Information is a directly productive force, say many. But what is information? It may be a chip design or a drug formula, in which case the "information" is inseparable from a complex manufacturing process that nonetheless ends in a commodity exchanged for money. The designs and formulas are vigrorously protected by intellectual property lawyers. Society as a whole would probably be better off if Intel's gross margins weren't 62% -- and Africans with AIDS would be better off if drug prices were a lot lower -- but capitalism has never been organized to maximize social welfare. Intellectual property lawyers are class warriors in expensive suits as much as Pinkertons were in Carnegie's day. Or there's information such as organizational structure and management technique, which is about how best to exploit your workforce. Or there's information like motivational technique, which is about disguising that exploitative relation. Most paradigm challenging may be the stuff that's limitlessly and costlessly reproducible, like software and videos. The movie industry is going to great lengths to protect the code that prevents DVDs from being copied: so far the expensively suited class warriors are winning this battle. Software is no longer copy-protected, but, despite all the threats from open source and free software, not to mention the Justice Department, Microsoft remains one of the greatest and most profitable monopolies the world has ever seen. And even if the DVD code were cracked, and Microsoft busted up, industries of this sort represent a surprisingly small share of economic life. Indeed, in the labor market, the mundane will prevail over IT chic for a long long time. According to projections from the U.S. Bureau of Labor Statistics, there will be three times as many cashiers as systems analysts in 2008, six times as many retail sales clerks as computer programmers, and seven times as many waiters, waitresses, and soda jerks as computer engineers. Law enforcement officers and protective service workers -- official jargon for security guards and private detectives and the like -- will outnumber the computer professions I just mentioned by almost 20%. It may be that artists, intellectuals, and journalists -- journalists rarely fall under the first two categories -- think that everyone's a knowledge worker these days, but rags and guns greatly outnumber mice as the standard tools of the service worker, even in 2008.
And, drawing on a point made by Ursula Huws in the 1999 Socialist Register, while the physical commodity -- the one, in the classic definition, you can drop on your foot -- may be diminishing in importance relative to services, many of those services are the commodification of activities that were once performed without the exchange of money (and much of that labor, whether paid or unpaid, is disproportionately performed by women). McDonald's replaces the home-cooked meal, commercial laundries replace in-house washing, paid childcare replaces the unpaid maternal kind. and now there are signs all over Manhattan advertising a service called UrbanFetch.com, which will do your shopping for you -- though it remains to be seen if this, like many e-schemes, has any real future to it. (Apropos paid childcare, a delicious factoid about the U.S. labor market is that parking lot attendants -- mostly male -- are paid more than child care workers, who are mostly female.) Or, services formerly performed by nonprofits, like education, are increasingly the realm of profit-seeking entities, from Chris Whipple and Benno Schmidt's Edison Project to the University of Phoenix. By focusing just on the form of the commodity -- good or service -- partisans of weightlessness overlook the monetized social relations behind even the most insubstantial virtual wares.
Monetized social relations may be encouraging myths of weightlessness in one largely unappreciated way. As Barbara Ehrenreich noted in a very fine essay in Harper's on the growth of domestic labor:
"To be cleaned up after is to achieve a certain magical weightlessness and immateriality. Almost everyone complains about violent video games, but paid housecleaning has the same consequence-abolishing effect. ... A servant economy breeds callousness and solipsism in the served, and it does so all the more effectively when the service is performed close up and routinely in the place where they live and reproduce."
Ehrenreich ties the growth in the professional/managerial class's use of domestic labor to the broad polarization of U.S. society -- the polarization of incomes, which leaves creates an affluent upper middle class capable of hiring a plentiful supply of poor women, and the polarization of work, "where so many of the affluent devote their lives to such ghostly pursuits as stock-trading, image-making, and opinion polling," which renders physical work largely invisible to the opinion-making class. With our shoes made in Indonesia, our cars assembled in Mexico, and a Jamaican to scrub the toilet, it's easy to think that stuff doesn't matter anymore. Which isn't to say that 18 million U.S. factory workers don't matter anymore -- if I had the time, I'd point out that domestic auto employment today is 130,000 higher than the day NAFTA took effect, but I don't have the time.
One of my other favorite New Economy stories is about the democratization of ownership, thanks to stock options and mutual funds. First a look at options, which are supposedly making employees into owner - partners. The National Center for Employee Ownership , a boosterish organization, estimated that between seven and ten million nonmanagerial workers received stock options in early 2000, up from just one million a year earlier. Managers, an earlier NCEO study conceded, still receive the lion's share of available options, and the later release fails to mention that even ten million represents under 10% of total employment -- and frequently serve as a fantasy-laden substitute for actual cash money for firms running deep in the red.
A San Francisco Fed study of the impact of IPOs on the California economy estimates that some 134,000 employees enjoyed options on stock issued between 1997 and 1999, with an unrealized value of $68 billion (before the tech stock selloff in the spring of 2000) -- an average of $500,000 per lucky worker. That sounds like a lot, but the author failed to offer any perspective, perspective that might have interfered with the spirit of celebration. Option-granted workers represented just under 1% of total employment in California, and their unrealized wealth equaled just 7% of the state's personal income. Big news for the optioned workers, for sure, and big news for the Northern California real estate brokers and Jaguar dealers, but not something that changes the fundamentals of the U.S. economic hierarchy.
And the Financial Markets Center examined 50 representative firms in the Fortune 500, and found that 21% of options were awarded to the top five executives, with nonmanagerial employees getting little or none. Further, the Center discovered that most firms were severely underestimating the eventual costs of the options to the firms when holders exercised those options. For a while, granting options may seem like free money, but at some point, firms are going to have to come up with the shares -- which they can do only by issuing new ones (which dilutes the value of existing shares) or buying them up in the open market (which costs real money). But that's something to worry about in the future.
Finally, to bring this exercise in the dismal science to a close, what about the overall wealth distribution numbers? And here I'm looking at wealth -- bank accounts, stockholdings -- rather than income, because wealth inequality matters a lot, maybe more than income inequality. Wealth insulates its lucky holders from personal economic crises, like unemployment or sickness. It offers the opportunity to go to school, start a business, or make big purchases without going into debt. It confers a degree of social prestige and political power. And it can be passed on across the generations. By contrast, income is a lot more ephemeral; you can have a good year, followed by a bad year. But wealth, if it's not recklessly invested, is usually there through thick and thin. It's also much more closely tied to Marxian notions of class, since ownership of the means of production usually takes financial form in these days of complex mediated social relations.
Start at the top, the Forbes 400. (The new numbers are in the current issue, but I haven't gotten a chance to look at them yet.) Last year, the 400 controlled $1 trillion, up 35% from the previous year. That was 2.4% of household net worth. accounted for by just 0.0004% of U.S. households. The 400's share of total wealth has tripled since the great bull market began in 1982. That's not a picture of democratization, for sure. Broadening out to the top 1%, that slightly less elite group controlled over 40% of total net worth in 1998, about four times their share of total income. The top 1%'s share has been pretty flat over the last 10 years -- flat at a level that's the highest since the days surrounding the 1929 crash. And these numbers include pension accounts and 401(k)s, the supposed instruments of democratization. And these figures are based on sorting households by their net worth, with assets held in many forms. If you look just at stockholdings, the top 1% of shareowners held 48% of all stock in 1998; the top 10%, 86%. The bottom 80% of the population held just 4% of all stock. How democratic indeed. But what has been democratized in recent decades is debt: the biggest growth in credit card and mortgage debt in recent years has been among the bottom half of the income distribution. The rich get richer, and the poor borrow some of their excess cash.
Let me conclude on two more optimistic notes. First, the fact that our ideologists have been busily producing tales of democratization -- and with them, tales of a new flexibility and self-management in the workplace -- suggests that there's a great desire for such among the masses, a desire that mythmakers need to fulfill. That suggests that there's at least some imaginative appeal left to the socialist project. Unfortunately, though, the ownership of even small amounts of mutual funds can have a toxic psychological effect, leading people to fantasize that they're owners too, and that their material interests are aligned with their betters, when in fact the bull market of the last 20 years has been largely powered by an increase in corporate profitability and the ruling class's celebration of its multiple political triumphs, from the busting of PATCO to the collapse of the USSR. But since I'm trying to be more optimistic these days, I'll move beyond that gloomy reservation to say that when I first started talking about the New Economy a few years ago, one of the things that seemed truly new was the sense of resignation, even despair, among radical intellectuals and activists. Over the last couple of years, though, there's been a massive upsurge of activism -- not just in Seattle, which it's almost getting embarrassing to mention; it makes me feel like an old-timer recalling the days of yore, but on campuses, and right now in Prague. Forbes magazine did a series of ads a few years ago with the tagline, "All hail the final triumph of capitalism." Then, "final" took on the meaning of irreversible. Now, it's not completely unreasonable to hope that another meaning was being unconsciously vented by the magazine's copywriters: the last gasp of the old before something new manifests itself. Let's hope so.