Krugman and Karl and the Kochs

The popular economist and influencial writer for The New York Times Paul Krugman evokes Karl Marx  “The American economy is still, by most measures, deeply depressed. But corporate profits are at record high. It’s simple: profits have surged as a share of national income, while wages and other labor compensation are down. The pie isn’t growing the way it should – but capital is doing fine by grabbing an ever-larger slice, at labor’s expense. Wait – are we really back to talking about capital versus labor? Isn’t that an old-fashioned, almost Marxist sort of discussion, out of date in our modern information economy?” This is indeed the conflict that Marx identified as the fundamental contradiction of the capitalist system - the class struggle,  the capitalists accumulate ever-vaster wealth at the expense while the people who work for them.

 Capitalism is based on private (or occasionally state) ownership and competition. Enterprises compete with one another for customers, and those who fail to attract a sufficient number eventually perish. But in order to attract customers, businesses must maximize the quality of their product while minimizing its price. If two products embody the same quality but one is cheaper, customers, in pursuit of their self-interest, will purchase the cheaper version, all other factors being equal. This means that capitalists must constantly attempt to minimize the price of their product simply for the sake of their own survival. If a business devises a way to lower costs, it can capture the market. But, as Marx pointed out, labor costs are a huge factor in determining the price of a product. So those businesses that minimize labor costs can prevail in the dog-eat-dog world of capitalism. For this reason, a downward pressure on wages and benefits is always operating to one degree or another. Krugman made no reference to this aspect of Marx’s analysis and instead identified two other factors that contribute to the growing inequality in wealth between capitalists and workers, both of which are discussed by Marx.

The first factor involves the introduction of technology into the labor process, i.e. “labor-saving” technology. In other words, machines replace workers or reduce the amount of skill required in the labor process. Living during the industrial age, Marx supplied many such examples in his writings. Krugman's second explanatory factor that increases inequality between capitalists and labor as the “monopoly power” of large corporations where “increasing business concentration could be an important factor in stagnating demand for labor, as corporations use their growing monopoly power to raise prices without passing the gains on to their employees.” Here Krugman is approaching the heart of Marxist theory. Krugman is basically arguing that large corporations use their power to override purely economic trends and simply demand that their employees work for less. But this is precisely the point of Marxism, although from the other direction. Marx persistently argued that capitalism could not function without the willingness of the working class to perform the work. When workers organize and engage in collective action by withholding their labor, the balance of power shifts in favor of the workers who can then demand higher wages as a condition for their return to work. Krugman never mentions the decline of organized labor as a huge factor explaining the decline of the standard of living of working people.

In the 1930s when labor unions were  fighting for working people, gains were made in terms of salaries and benefits. They conducted militant sit-down strikes and mobilized tens of thousands of people from the community to support labor’s struggles. Their successes were to a large degree responsible for the emergence of the so-called "middle-class" that thrived in the 1950s and 1960s. Workers who are organized, acting both collectively and forcefully, can change the economic landscape. But once organized labor becomes complacent and relaxes its guard and ceases to struggle, the laws of capitalism ineluctably grind down their gains and the growing inequality returns until workers again rise up. We must go back to the strategies of non-violent disruption of the 1930s. Currently organized labor is all but dying out.
Collective bargaining rights are on the forefront of the attack upon unions. Strikes are like an endangered species. Rather than engaging in militant struggles, union members are urged to elect Democrats who then call on workers to accept sacrifices. AFL-CIO President Richard Trumka has called on working people “to fight like hell” to resist cuts to Social Security and Medicare. But these are just words. To this date, the unions have failed to mobilize their members.  Without the unions taking the lead in this struggle, there is little individual workers will be able to accomplish. And if the unions refuse to return to their more militant roots but remain invisible, economists like Paul Krugman will continue to ignore their existence and overlook their current historic failure to defend working people.

Marx argued that eventually workers would see the futility of this repeating cycle, reject capitalism altogether, and begin to construct a socialist society.

Taken from this article 

The current battlefield of the class war is being waged in Michigan where a specious argument extolling American individualism and right-libertarian blather about economic freedom is camouflaging a power and money grab by the usual suspects - capitalists. The billionaire oligarchs the  Koch brothers are funding anti-union efforts by Rick Snyder and Republicans in Michigan. Strikes and protests have taken place in an effort to thwart their offensive but Michigan lawmakers gave final approval to the anti-union legislation. Michigan, cradle of the industrial labor movement in America, birthplace of the United Auto Workers may become a Right-To-Work state. Even President Obama called it "the right to work for less money." Wages for workers are lower in RTW states. It should come as no surprise that when unions are weakened that this weakens the negotiating power of unions and also weakens the competitive wages offered by companies that are not unionized. RTW is like a receding tide that lowers all boats.

Almost 75 years ago the National Labor Relations Act specifically authorized the contracts collectively negotiated by labor unions to require all workers benefitting from the  contract to pay dues to the union that negotiated the contract, a fair procedure called a "union security agreement" that helps protect against freeloading and also keep a union's power to enforce the contract strong. But Congress under pressure from corporations amended that law to allow states to opt out of those procedures through what proponents call RTW laws. It allows workers who choose not to join the union to take advantage of the union's representation without chipping in to cover the costs. And that effectively defunds the union.

 Wendy Thompson, the retired president of United Auto Workers (UAW) Local 235 in Detroit said "Unions have to become stronger on the shop floor, in the workplace."