Capitalism Is Organized Crime

[WhoCountsTheVotes]

CAPITALISM IS ORGANIZED CRIME
By Paul D. Lawrence

This writer sometimes wears a button that states, "Capitalism is organized crime." These days it is difficult to distinguish a newspaper's business pages from the police blotter. Although, as will be shown, the current round of corporate scandals is something of a red herring, it is worth noting that the following, not all breaking news to be sure, were among the crime reports on the business pages on two successive days.

-Sam Waksal, former CEO of ImClone Systems Inc., began serving a
federal prison sentence of more than seven years for securities fraud and perjury.

-A subsidiary of Abbott Laboratories pleaded guilty to obstructing a
federal investigation of Medicare and Medicaid overcharges and agreed to pay $600 million in fines.

-Freddie Mac admitted underreporting profits by $1.5 billion to $4.5
billion over the past three years. The new CEO told a House of
Representatives subcommittee that the residential mortgage provider knew "how to fix these shortcomings" and would presumably sin no more.

-To sum up, the Associated Press reported that the Corporate Fraud Task Force has "obtained more than 250 corporate fraud convictions,
including at least 25 former CEOs; charged 354 people with corporate crime; and obtained fines, forfeiture and restitution worth more than $85 million, the administration said."

"Bush league" comes to mind, for all these offenses are petty larceny
compared with what Socialists have called "the greatest robbery in
history"--the exploitation of the working class by the capitalist class. Amazingly, the U.S. government publishes statistics that allow workers armed with a knowledge of Marxian economics to approximate the extent of that robbery. In manufacturing alone, where calculations are relatively straightforward, that robbery amounted to at least $1.64 trillion in 2000. That is the figure of value added by manufacture as reported by the U.S. Census Bureau. The workers whose labor produced that value received $363 billion in wages.

Value added by manufacture represents the difference between all inputs (raw materials of whatever sort, energy, value transferred by
machinery, wages, etc.) and the value of manufactured commodities. In 2000, workers added value of $2 trillion by their labor. The difference between that value and the value of wages is a rough gauge of the surplus value extracted by the capitalists. Wages amounted to 18.1 percent of the product of workers' labor, for a rate of surplus value of 551 percent.

Those were gross wages, which exclude "taxes" and other deductions that workers never see and only serve to maintain the illusion that workers, like capitalists, are taxpayers. The wages that count, the net wages that workers take home, represent something approximating the value of workers' labor power--what is needed to educate and train workers with skills for exploitation, what is needed to support them and their families and produce the next generation of wage slaves. In the past, The People estimated that the legerdemain of taxes could amount to 20 percent of gross wages, which would obviously increase the rate of exploitation.

Even without attempting such adjustments, the rate of exploitation has
clearly been increasing. In 1972 wages equaled 29.9 percent of value
added compared with 18.1 percent in 2000; the rate of surplus value was 334 percent compared with 551 percent.

Thus, it is clear that the relative share of workers' wages is
decreasing and the exploitation of labor is increasing. Under capitalism that robbery of workers is perfectly legal. It is up to workers to change that by organizing politically and industrially to replace capitalism with socialism.

Much of the ruling-class concern about corporate scandals is that
"investors" are being cheated. Let us be clear: "investors" by and large buy and sell existing shares in various enterprises. They don't invest money capital in production. The shares they buy and sell represent the right to share in the exploitation of workers. Thus "investors" are cheated out of the anticipated value of robbing workers. The pot calls the kettle black.

(NOTE TO MODS: with permission)

[mhr]

1. Link Please

eom

[catzies]

9. Yes, please.

Kick

[muriel_volestrangler]

11. PDF link

http://www.slp.org/pdf/pdf_thepeople/09_10TP03.pdf

[info being]

2. Not "capitalism", just American-style capitalism

which isn't Capitalism at all, but Corporatism...rule with an iron fist by the wealthiest.

[moondust]

5. European capitalism isn't bad.

Mix of mostly small-business capitalism and socialism with multi-party politics makes it quite liveable and I think relatively incorrupt.

[Character Assassin]

12. Um....... No.

There are plenty of European behemoths who exhibit the same tendencies as their US counterparts.

The Forbes Global 500
1 Royal Dutch/Shell Group Netherlands oil & gas 179,431 8
2 BP United Kingdom oil & gas 178,721 10
3 DaimlerChrysler Germany automobile 140,777 6
7 Allianz Worldwide Germany insurance 101,466 NA
8 Total SA France oil & gas 96,504 7
10 ING Group Netherlands diversified finance 87,754 21
12 Volkswagen Group Germany automobile 84,707 4
13 Siemens Group Germany multi-industry 77,013 8
18 Carrefour Group France food & drug retail 64,683 10
19 AXA Group France insurance 61,768 7
22 Ahold Netherlands food & drug retail 59,184 NA
23 Nestle Switzerland food products 57,204 10

For the total list, check out: http://www.forbes.com/2003/07/07/internationaland.html

"Each year we identify the largest companies, in terms of revenue, based outside the U.S. Based on 2002 results, the International 500 posted aggregate sales of $9.1 trillion, up 3% from the previous year. In contrast, the total sales of America's 500 largest companies, by sales, amounted to $6.7 trillion in 2002."

[Terwilliger]

29. you're an anti-corporatist?

"based outside the U.S." -- all-world totals? Wouldn't 6 out of 9 be pretty strong comparitively?

[Terwilliger]

3. kick the quasi-Marxist ideas!

[info being]

4. ok...kick

[elfwitch]

6. one further

I'd say that Insurance is institutionalized extortion.

[muriel_volestrangler]

8. presumably you mean compulsory insurance (n/t)

[elfwitch]

10. sure...

Like car insurance. Texas requires you to have it. But when you need it they penalize you for it. Big honkin' racket if you ask me.

[sweetheart]

7. then what is weatlh concentration?

When company X buys their competitor and doubles in size... is that not the legal equivalent of selling a plantation (slaves included)?

[mhr]

13. We No Longer Live In A Democracy, Just A Commercial State!

Everything is for sale including the government.

[lostnfound]

30. What a great summary!!! n/t

[redqueen]

14. *sigh*

Love your sig... it is well worth repeating.

Watch out, you rich people, weep and wail because of the misery coming to you. Your money is debased and will be used as evidence against you. You have hoarded wealth and stolen the wages of workers through fraud, and their voices have been heard by God. - James 5:1


:kick:

[WhoCountsTheVotes]

16. good one, isn't it?

I'd like to see right wing fundies explain that one!

[muriel_volestrangler]

18. I'd like further explanation too

How is the 'value transferred by machinery' calculated without knowing the value of the manufactured commodities? Anyone know what the source of these figures is?

[RichM]

15. I agree completely. Bush represents end-stage capitalism.

The present mess is exactly what must happen, sooner or later, when the organizing principle of society is limitless personal wealth accumulation. Sooner or later, no matter how good the intentions or original regulations, a small group of exceptionally wealthy individuals will emerge, & will figure out how to use their wealth to purchase control of the government. Once that happens, the ball game is over.

[Scott Lee]

17. End game of capitalism = Fascism

This is why I want to punch Terry McAuliffe in the mouth. He's one of these guys in a donkey uniform.

[Terwilliger]

24. oh, what are you talking about?

that is nonsense

Was FDR a fascist?

We don't have to have authoritarian socialism to revamp and reform capitalism.

[camero]

28. I don't think he was saying that

I think he was saying that unchecked capitalism turns into fascism.

[JanMichael]

20. Yes. It is in it's "end stages". How long the convulsions go on is...

...the only unknown IMO.

[sweetheart]

22. empire breakup

first the dollar hegemony... the far east floats exchange rates and oil is traded in euro's... then the trading partners shift towards multicurrency non-dollar globalism... and finally, the USA, bankrupt and berefit of the means to sustain its imperial grasping.... defaults.

The default forces the american states themselves to seek alignment with economicially coherent groups of states, and over time, the states themselves owe more fealty to their trading partners than to other blocks of states... american balkinization and breakup... taking 100 years.

Breaking up opposition has been the dagger with which the USA has struck at its opponents for decades now from yugoslavia (now several nations) to before that hapsburg and latter iraq (which will be more than 1 state by the time its done... and palestine which will break to more... and and and and and. divide and marginalize is the new strategy... divide the south from the north, from texas, from the great lakes, from the west.... its only a matter of political will and the will of whomever owns the big media corporations that enact that will.

[Hammie]

19. Meaningless calculation

Basically it amounts to a comparison of the gross margin on product the labor cost to produce it. And that is important how?

Please spell it out for the dim witted amongst us. What is the scandal in a 50% increase in the ratio of gross margin to the direct labor cost? It is easily ascribable to productivity increases over the nearly 30 year period. Please enlighten me.

[WhoCountsTheVotes]

21. when you say, labor cost, you mean wages right?

Plus other employment expenses, "labor cost" boils down to wages plus taxes right? So if workers are more efficient, produce more, and get paid less, they get a smaller percentage of the gross margin on a product?

It seems that the margin, after costs, have to be split by the workers, and the investors. I would generally tend to want the workers to get a bigger piece of the pie, but that's just because I'm a worker.

Forgive me, I'm obviously not well schooled in economics, and I have a hard time understanding theories that say I should get paid less.

[Hammie]

23. Labor cost is wages plus benefits

As for productivity, if you work for me and I invest in a cool machine that allows you to produce twice as much per hour than you used to, should I pay you twice as much? You might think so, but it doesn't work that way. I had to pay for that machine and it only makes sense to do so if it makes my labor costs per unit production go down. You only get paid more if a) you are capable of running the new machine and b) the supply of people that can run the machine is lower relative to the demand for them.

The macro economic trend, supposedly, is that the higher the average worker productivity the higher the average wage. Whether you personally can realize the benefit of this and to what degree depends on your own situation.

As far as your getting paid less comment, I didn't say anything about anyone's individual wage. The only "fact" we can glean from that article is that the ratio of margin to labor went up. There is no information in there about average wages, average profits, or any other metric of real interest. Depending on what I make, and how much labor it takes vs. other costs, my gross margin could be 10X my direct labor costs and I could still be losing money.

[muriel_volestrangler]

25. I think it boils down to exploitation

To a capitalist, exploitation is not theft, because the worker enters into an agreement with the owner willingly. Just because the owner end up with most of the profit from the agreement doesn't make it robbery - it's just that the owner bargained better. This was probably because the owner had money already, which gives them an advantage in a standoff - the owner can still live in that situation, while a worker starves.

To a socialist, this is unfair, and therefore 'theft', even if the owner never takes something away from the worker. A socialist wants the profits of a work agreement distributed evenly. However, this may end up putting limits on the private ownership of property and money. What socialism needs to show is how to reconcile these limits with the incentive to work. So far, we have to rely on altruism - the kindness of people with money not to screw others too much.

[Hammie]

26. Owners end up with all the profits

In the absence of a specific profit sharing plan, all the profit goes to the owners of a company. That is what profit is.
Employees are paid salaries or wages depending the job.

The profit is the owner's reward for a) creating a company and b) structuring it in such a way that there is a profit. That b part is tricky. If you can make 15% profit after tax, you are doing pretty good. However, it isn't that easy to do. Especially in an ever changing economy. The structure that worked well for you this year, could put you in the red next year. But since changes take time to implement, you have to forecast what will happen next year so that you can be properly positioned in advance. It doesnt take very many mistakes to take that 15% into the red. Too many years of no profit and guess what the salaries and wages are gone too because it is bye-bye company.

As a salaryman I say God bless the owners of profitable companies. I don't think I could do it but I'm damn glad that someone can. I'd much rather have a small slice of a big pie than no pie at all.

[muriel_volestrangler]

27. yes, I shouldn't have said 'profit'

what I meant was 'benefit' - ie the wages for a worker (agreed in his contract), or the profit for the owner (if the business plan succeeds).