Capitalism is When the World’s Richest Man Gives People a Raise But They Still Barely Earn Enough to Live On

How the Story of Amazon Teaches Us Predatory Capitalism is an Epic Failure

Hey, did you hear? Amazon just raised wages to $15 an hour — hooray! Capitalism’s finally working, right? Wrong. Does it prove capitalism has finally taken one small step — or that it can never take a giant leap?

You might not know it, think it, or even agree with me when I say it. But Amazon’s strange, weird, and gruesome story is also the story of the epic failure of predatory capitalism, what proves that we can’t build working societies atop it, today, tomorrow, or ever. Workers managed by algorithms, who earn barely enough to subsist on (after that raise) while Jeff Bezos became the world’s richest man, and Amazon one of the first trillion dollar companies — let’s start at the beginning.

“World’s richest man finally gives employees just enough to live on” doesn’t sound like a triumphant vindication of capitalism to me — it sounds like an indictment. A little — or maybe a lot — like let them eat cake. An income of $15 an hour earns someone about $30K a year. That’s a hair above the grossly inadequate poverty line — which is $20K (where in America can anyone live a decent life on $20K a year?) — hardly the stuff of anything resembling a middle class life.

But that’s the problem. The middle class in America has shrunk for the first time in its history — and when middle classes shrink, political implosion usually isn’t far behind, because middle classes aspire upwards, and so when they don’t get what was promised to them by consent — status, superiority, safety, belongings, possessions, savings, riches — they often try to take it by force. Bang! Authoritarianism, fascism, extremism. So much is the story of modern-day America. But what is still overlooked in America is that building a working society again requires building new pathways into middle class life again. And yet a $15 an hour wage isn’t (even close to) one. So while paying people a little bit more after decades is nice — but it doesn’t change the toxic dynamics of capitalism — that it implodes into fascism, left to its own devices — one bit. Why is that?

The average American is still being exploited, in classical Marxist terms — and, even more weirdly, he has been told that being exploited is all he deserves, because exploitation will one day make him rich (LOL, it won’t, it hasn’t, and I’ll come back to that). The Amazon employee who now earns $15 is making more than twice that, at least, for capitalists — his productivity vastly outstrips his wages. How else did Jeff Bezos get to be the world’s richest man? And yet every year, the worker’s productivity must rise — he must work faster and harder, managed relentlessly by now by an algorithm, which demands constant, perpetual improvements in “efficiency” — but his income doesn’t rise except once every few decades, does it? He’s won one raise after decades — but it’s not as if Bezos has said: “I’m going to pay my workers in line with what they really produce, every single year, forever.” In fact, it will probably take another decade, maybe several, for another single raise to happen — if it does at all. Do you see my point? The dynamics of exploitation built into capitalism remain what they are, and always have been. And those dynamics fuel fascist implosions in the end — because the prole who has been told he will one day be a capitalist, when he finds impoverished, explodes in rage, fury, and resentment.

And yet (even though people like me warn them of all this when they ask us how we think everything’s going), capitalists do not really care about the ruinous social consequences of exploitation. When has a capitalist ever said — “Oh my God! I’m the guy that’s destroying the middle class and turning democracy into authoritarianism, not just Trump!”? Hence, until political pressure outweighs the costs of inaction — in Amazon’s case, growing calls for regulation — capitalists don’t give an inch, they just exploit and exploit. So by giving workers a pittance, Amazon buys a little political capital — it’s better to think of this raise as an investment in lobbying against regulation than anything else, and it’s a mistake to suppose any capitalist would do such a thing out of the kindness of their hearts.

Yet all that also mean capitalism isn’t paying for this raise. That’s another funny and dirty secret of capitalism — people’s raises come out of their own pockets, only they don’t often know it. How could capitalism ever really be paying for raises if it gets richer and richer — while no matter how much you earn, you struggle to make ends meet, like 80% of Americans do, if people never really get richer? So who’s paying for this raise? Unless Amazon pays for higher wages by shrinking its own profits — how likely do you think that is? — it will have to squeeze suppliers, consumers, or society. Which will it be? Probably all three. Yes, workers are better off — but if they are Amazon consumers, too, as many are, extra pennies and nickels charged will soon enough offset it. If those workers pay taxes, which they do — but Amazon barely does — then they will see their tax bills rise a little, as Amazon recoups profit that way. In all these ways, it’s not really Amazon who gave workers a raise — they are funding their own raises, as consumers, taxpayers, and citizens, and Amazon will go on pocketing the difference between the two in profit, which accrue to capitalists.

How would we put all that, in Marx’s terms — which are, funnily, the best ones we have to explain this, since American economics would just say: “hey! That all sounds great to me!”, even when the stakes are democracy and social implosion? What Amazon really shows us is just what Marx once predicted — the rate of exploitation in capitalist economies will never really decrease, but probably only increase. Workers who earn higher wages today will have to work that much harder tomorrow, and their productivity will increase faster than their incomes, just as it has always done. And those higher wages are an illusion, too, probably — they will probably come not from capital’s income, but from eating away at what surplus society has.

So little — if any — real wealth is created here. Until and unless such a raise comes from the profits of capitalists, nothing at all has really changed in the economy — no real value has been distributed from capital to labour, really, it has only gone, by a more circuitous route, right back to the same old distribution. Workers might see higher wages, but their real incomes will not change, because profits will have to remain constant by another means — which will come out of those very same people’s pockets, only by another hand. In Amazon’s case, a true redistribution of capital to labour income is hardly likely to happen, since it’s share price is a linchpin of America’s fragile, duct-taped-together economy, and it would implode if such a thing were to happen.

Are you seeing the problem here? Capitalism can create the illusion of progress and improvement — but not the reality. Yet here we have the strange situation of capitalism giving people — begrudgingly, after a long political battle — the least possible amount it could get away with, and America mostly celebrating that as some kind of heated success. It is not success, my friends, for the simple reason that it will not stop capitalism degenerating into fascism, for exactly the reasons above: the rate of exploitation will not really decrease, and people’s incomes will not really rise. So what it really teaches us is that Americans have set far too low a bar for what success — at least when it comes to reforming society and building a working political economy — is.

What we should be asking, probably, is exactly the reverse question. Why should any rich society have poor people working for subsistence wages at all — while, on the flipside, billionaires shoot themselves off to Mars?

Let’s think about all this. The argument that American economists and intellectuals make goes like this: “billionaires created that stuff! They deserve all the gains from it!!” Only it’s trivially untrue. Jeff Bezos didn’t create all the stuff Amazon uses. Amazon wouldn’t exist at all without the following public goods: the internet, the www, the airwaves, roads, the mail, oceans, the alphabet, democracy, rights, just to name a few. Therefore, just as trivially, it makes precisely zero sense for society to let one person appropriate all the gains from a service built atop such goods. And yet that is precisely what America has done. But that is why people have grown impoverished, too — billionaires have internalized the benefits of centuries of progress, without contributing, really, anything back to society. Bang! People grow poorer, not richer. In a world of thinking economists and intellectuals, we’d count it as success when Amazon paid hefty taxes, in order to fund tomorrow’s public goods — not just when it paid workers barely enough to subsist on.

If the trillion dollar companies are built on centuries of social investment in public goods — then why should people only have enough to subsist on, anyways? What’s the moral and philosophical logic behind this? Again, it’s a notion advanced by American economists and intellectuals — a kind of economic Darwinism is at work here. Pay people too much — they’ll get lazy, indolent, and become parasites. You must perish, so that the most economically fit can be selected — hence, a person should only ever have a decent life if they have “earned” it. Only again, we can see that this is trivially untrue. The most effective “parasites” on the real economy — the one which makes things — are Wall St and Silicon Valley. Google and Goldman Sachs don’t make anything — they “allocate” things, or simply sort and rank and value them. So does Amazon. But an economy which rewards the things which sort and rank value other things more than the things of real value soon enough shrinks. Hence, a humble teacher, engineer, or nurse makes, in real terms, less and less every year — while a hedge fund manager or a founder of a mommy-replacement-app rakes in millions, maybe billions. That, too, is why the average American lives perpetually perched at the edge of ruin, while the people that make things of no value, but only value things, have grown astronomically rich.

So Darwinism hasn’t worked out for Americans — because the kind of “fitness” capitalist Darwinism is selecting for is the ability to exploit others, just as Marx long ago predicted, which is why the rate of exploitation in America is always increasing — even if a glittering $15 an hour raise makes it seem as if it isn’t. Hence, American economic institutions — corporations, banks, funds — have grown incredibly effective at creating ways to exploit people, but that is about all they really excel at, and many of them even do, at this point. You only have to glance at America’s dismal statistics for a moment to understand it: life expectancy shrinking, savings dwindling, depression and suicide rising, people working longer and longer hours, only to realize poorer and poorer lives, every year.

There is no natural or inherent reason that America today has the world’s first trillion dollar companies, owned by billionaires — while most American live paycheck to paycheck, and can’t raise $1000 for an emergency. Those are choices — choices propelled by a fatal and foolish strand of thinking about political economy that proposed survival of the fittest as a way to make ultimately everyone rich. But it didn’t make everyone rich — that much is self-evident from the facts above. So the question is: why do American still believe in it’s fairy tales? How long will they go on believing in it?

The question of what kind of life the average person deserves should never be left to capitalists, or economists who’s only answer to every question is “more capitalism!”. American economics will always suggest that people deserve nothing at all, except to perish and be abandoned, because it assumes that everyone must only ever be a cruel, narrow-minded, robotic, emotionless, self interested profit maximizer to begin with — and that is how you end up with America. What people deserve is a moral question, first of all — and the economics of those moral arrangements (“who deserves what part of society’s riches?”) are up to democracy, not vice versa: democracy should never be superceded by the moral presumptions of economics, because to do that is to reason backwards.

In a sense, we’ve built our societies exactly backwards — and that is a consequence of putting predatory capitalism first, and democracy, sanity, reason, and wisdom last. If we want everyone to have a decent life — as we should, if we hope to prevent further social implosion — the answer is straightforward. Societies must use the vast amounts of capital and labour tied up in capitalism — which are going to increasingly absurd and fruitless pursuits, space vacations, one hour delivery, and so on, while people go without basic medicine, retirement, education, and healthcare — and put all that, the money, time, energy, ideas, resources, towards exactly those things, by investing it where it yields genuine benefits again. All that we might simply better call social democracy.

Amazon’s strange, weird, and sad story is also the story of the epic failure of American capitalism. A failure that is still ours, in the low, low bar it has left us with, for democracy, progress, and human possibility. One of the world’s first trillion dollar companies. Owned and run by the world’s richest man. Who finally gave his workers barely enough to live on. And was celebrated for it. Instead of met with a kind of yawn of — “Dude! Give those people a decent life. Pay them what they’re really producing, every year. And then pay your taxes. So people can have healthcare, education, and safety nets — and fund the public goods of tomorrow, the very ones you’re internalizing all the gains of today. If exploiting people even more every year is really the best the world’s most valuable company can do — then capitalism is a failure. Because we can’t build societies working societies on that.”

Umair

October 2018