A Close Look at the 99%, the 1%, and What the Occupy Movement is Up Against.
Dale Johnson, [email protected]
We steer only by the grossest landmarks. Turn left at bewilderment. Keep going til you hit despair. Pull up at complete oblivion, turn around, and you´re there. Richard Powers, The Time of Our Singing, New York: Picador, 2003.
The statistic 99% is not just arbitrary figuration, the sad truth is that 99% of the American public is disadvantaged by the trends in United States economy, polity, and society. Yet we can expect that most of the 99% are not in the short run going to be mobilized on the streets by the Occupy Movement. In the elections of November 2012, voters divided closely between Republicans, a party that now represents the extremes of retrograde, right-wing ideology and Democrats with more gentle rhetoric and weak defense of social programs, but who in the main are servile to economic power and the imperial ambition and hegemony that economic power pursues. The system that we endure disadvantages and misleads the bewildered majority and morally corrupts the minority. Republican Zombies have greed-locked political life and infiltrated the minds of the loyal opposition. The electoral process is made a farce by big money and ossifies in political paralysis. The judicial system opens avenues for the rule of money and wider repression while there is closure to the use of the Law to curtail the extension of the repressive apparatus or to punish the misdeeds of the powerful. Public education, with sectors becoming privatized with Charter Schools, fosters standardized tests on students that measure how well teachers teach and youth grasp the necessity to fit in the roles that the powerful define and how far away education can move away from teaching independent, critical thought. Institutions of higher learning are privatized, or made so expensive they become exclusionary, and change educational missions to business programs and research missions to get their hefty corporate grants. The press is downgraded to serve up banality and lies, allowing the extreme right to define the news agenda and frame the limits to acceptable thought. The economy is in the hands of financial oligarchs whose malfeasance brings the economy down. Indignation is here and there but submerged in fear, while effective actions expressing outrage is confined to the fringes of right and left. So America will muddle along under the sway of the Plutocrats and their servants in political power, despair and discontent at every higher level, until the Occupy Movement can mobilize the forces of unity among the 99% and do more than make noise.
The delusions that Republicans propound and Democrats hide from find their home in the despair that prevails among the bewildered and suffering populace, in the main oblivious to real solutions with consciousness subverted by now threatened privileges, however petty these may be, of previous class positioning; by xenophobia created in a climate of fear, hate and endless futile war; by the pervasiveness of racism and the resurgence of patriarchy and sexism; and most of all by the founding myths of capitalism that have turned American society, and most of the world with it, into a war of all against all wherein only the fittest of the rich survive. We need some new landmarks constructed piece by piece by those no longer bewildered and despairing because they have vision and inspire redemption from the evils of savage capitalism in its degenerative phase.
I am an Old-timer from the 1960s—in those days a student activist and young professor of sociology– but now an old curmudgeon, an aged and obdurate radical, yet inspired still by the better years and hope for resurgence. What I really want to convey here is a sociological analysis of American political economy as it effects the class situation of the 99% and to draw from that strategic concerns for genuine social change. This requires an analysis of the sources of economic stagnation and crisis and the manners in which these sources transform the relations of social class. First though, a look at the immediate and more familiar sources of the current crisis. In the economic sphere this crisis is rooted in the ascendance of bankers to the leading position within the capitalist class and that economic dominance has lead to plutocratic control of the greed-locked political sphere.
THE FINANCIALIZATION OF CAPITAL AND THE POLITICAL POWER OF PLUTOCRACY
Throughout his long tenure as Chairman of the United States Federal Reserve Alan Greenspan regularly appeared before the Congress. The obsequious Senators bowed to Greenspan as if he were the Messiah of the century illuminating the most profound words of wisdom, an appreciation enthusiastically shared by President Clinton in the 1990s and President Bush in the 2000s. The financial crisis devastatingly revealed that Chairman Greenspan was a blower of bubbles, a purveyor of obscurantism, a servant of Wall Street power, a charlatan, and an exalted example of the Neanderthal Zombies now in the saddle of power. In 2008 we expected more of a President who promised change. Yet, President Obama´s appointments to the Fed and the Treasury Department in 2008-09, and the staff that surround them, are all out of the same Wall Street mold—just as Obama´s appointments to the Department of Defense, the National Security Agency, and the CIA were figures associated with the wars in Afghanistan and Iraq and the war crimes and crimes against humanity of the Bush era.
With the depth of the financial crisis and the subsequent economic decline in the United States and extending throughout much of the world and given the widespread comprehension of the causes of the debacle, how can one understand the Business As Usual ambient that prevails in the United States, and in somewhat different circumstances in Europe?
The United States is a nation in which the economy is predominantly controlled by finance capital, the .01% among the 1%, and the moneyed elite at the head of big banks and Wall Street investment firms hold positions on the Boards of Directors of the major corporations in all sectors. They also have very substantial political power with unrestricted funds to pollute the political culture and to bribe politicians. Mitt Romney´s top campaign contributors were Wall Street investment firms and banks, with Goldman Sachs, Bank of America, and JPMorgan Chase at the top of the list, which also includes Credit Suisse and Bain Capital. In contrast, Barack Obama´s chief contributors were technology companies like Microsoft, Google, and IBM, along with universities. These lists do not include the many millions raised by the Super-Pacs organized by corporations and the wealthy most supporting ads and activity supportive of Romney. The plutocrats will likely forgive Obama his reference to Wall Street “Fat Cats” as long as his actions are consistent with their interests, as they will likely be.
Two statistical references illustrate the increased dominance of the financial sector within the U.S. economy. During the decade of the 1960s financial profits as a per cent of total corporate profits averaged 15%. This percentage increased in the 1970s, hovering around 20%. The proportionate increase in financial profits rocketed from 1985 to 1995 to over 30%, dipped a bit in the economic difficulties of the late 1990s, to again take off in the 2000s, ascending to 40% of the corporate take in 2005-2007. The corollary to this tendency is the long-term decline since 1985 in non-residential fixed investment as a per cent of Gross Domestic Production. During the 1970s productive investment averaged over 4% of GDP—a low figure reflecting the long-term stagnation tendency of the U.S. economy—but by 2005-2007 fell to 2.7%. (1) Excess productive capacity of U.S. industry has steadily increased, while American industrial corporations, often with financing and consultative services from the big banks, shifted their investments to China and to countries where labor is cheap and the investment climate good. Thus, the modest growth of the U.S. economy since 1985, but especially in the 2000s, has been mainly due to activity in the financial sector not in the ¨real economy¨, that is to say in financial speculation, not in the production of useful goods and services that provide jobs and income to consumers. In a functioning economic system the financial sector must be the facilitator of production, not a usurper of surplus and economic power. From the point of view of finance capital, the economy that produces real goods and services has the disadvantage of spreading income downward to employees and consumers in the economy, whereas financialization of the economy allows siphoning monies upwards to the plutocrats without the proceeds having to be spread around the debt-burdened population. The debtors had a temporary fix to their increasing precarity since the 1990s by borrowing against increasing home equities and credit cards until 2007-08–in the end they paid not only the interest but lost their homes and jobs.
Economic growth of the U.S. economy over the years since 2000 was due largely to two factors, government military expenditures in armaments and war and speculative financial bubbles in real estate mortgages and various asset derivatives. For many years the U.S. has spent more on armaments than almost all other nations in the world combined! While vast ¨defense¨ expenditures provide employment to American workers, American consumers cannot eat bombs or live in the drone aircraft that have the sole use of killing people in other countries. Meanwhile, big banks and Wall Street investment firms packaged home mortgages into Collateralized Debt Obligations (CDD), invented derivatives and other aggregated assets to make them into marketable instruments and then sold them throughout world financial markets. This precipitated an extreme appreciation of real estate and other asset values in the U.S. and elsewhere, especially Europe. The Federal Reserve, largely deregulated from controls over Banks under President Clinton, obligingly facilitated the real estate spiral and consumer debt by lowering the interest rate to historic lows in the 2000s Consumers borrowed against equity in their homes and charged heavily against credit cards liberally advanced by the banks. Workers and middle class employees, in total dependence on commodity markets, sought to compensate for declining incomes by borrowing to preserve their standard of living. Rising education costs and falling government subsidies to higher education forced students to resort to loans that they may never be able to repay, potentially causing yet another bubble that may eventually pop. In 2007 and 2008 all the asset and derivative bubbles burst. But the financiers who created the world´s greatest Ponzi schemes are still there doing Business As Usual, having been bailed out financially and reinstated politically, while they continue to engage in criminal activity, like the 2012 Libor interest rate rigging scandal, with impunity.
The bankers that reward themselves with stupendous annual bonuses for their dedicated work in destroying the world economy and along with the corporate rich in general avoid paying taxes by stashing trillions—that is trillions, not billions or millions—in off-shore tax havens. (2) Then President Bush and the Congress gave tax cuts, Obama extended the cuts and held open loopholes in the tax codes so that the rich can engage in financial speculation at even higher levels and hide yet more money off-shore.
Finance capital is now highly concentrated into conglomerate groups. The 10 largest conglomerates hold more than 60% of U.S. financial assets, compared to 10% in 1990. These giants include JP Morgan Chase (caught up in yet another financial scandal in May 2012), Bank of America, Wells Fargo, Citigroup, and Goldman Sachs. This constellation—not established industrial giants like GE or the high tech innovators like Microsoft—is the center of economic power in the U.S. The Wall Street financier, not Microsoft´s Bill Gates, is the symbol of where money, systemic direction, and economic and political power now reside. In the new Obama administration, it is likely that all the top appointments to the Federal Reserve, the Treasury Department, the National Economic Council, down to the President´s advisors and staff, will be from or closely linked to the Wall Street conglomerates. Plutocracy rules economic policy; government is of, by, and for financial capital, and not just in Washington but in the European Union as well. Finance has become a global criminal enterprise that operates with impunity for crimes of fraud, malfeasance in office, money laundering, tax evasion…and then collects from the public treasury even when its bubbles burst and its schemes are exposed.
Of course, finance capital is not confined to the big Banks and Wall Street Investment firms, there are a wide range of financial upstarts on the fringe, the vulture capitalists that started in the 1980s and 1990s in the hostile takeover mergers of vulnerable firms, the dot.com swindlers, Enron and Bernie Madoff scams, and companies like Bain Capital where Republican Mitt Romney made his fortune by taking over businesses to restructure at the expense of stock holders and workers, to load companies down in debt, strip their asse