Thursday, February 08, 2007

The Middle Class Are The Burgeousie

There is alot of talk in our political media about the middle class, and many on the left champion themselves as being all about raising the well-being of the middle class. There is also a rather prevailant adoption of the Marxian concept of the burgeousie. According to the Marxian class analysis, there are two classes: the proletarien (the workers and poverty-striken) and the burgeosie (the employers and assorted evil rich people who exploit the proletarien). But, according to further Marxian views, any amount of money or property that one obtains that is above mere substinance is inherently achieved through "exploitation". In short, anyone who accumulates capital and savings, who possesses more than they technically naturally "need" to survive (I.E. any kind of "luxury"), must be an "exploitive" capitalist under this view. If this were actually the case, then this implicates the vast majority of people, including the entire working class and middle class as being exploiters.

Therefore, it is very clear that what Marx means by the elimination of capital is just that - the eliminating of both the middle class and rich alike, or even "poor" people who are considered above a certain substinance level. Afterall, "the middle class" consists of people who have managed to maintain a level of income and luxury beyond mere substinance on the basis of their productive abilities and cooperative action, a "savings" (surplus/profit) of some kind. "Capital", the very thing which Marx seeks to eliminate, is what the middle class relies on to maintain their living standard. Marx proposes the ridiculous utopia of a completely classless society. It so happens that his proposed method of making us classless is to make us all equally devoid of any "luxury" beyond substinance (or indeed, devoid of full or adequate substinance!).

The communist view of an ideal society is one in which noone is allowed to make use of their ability to rise above a particular substinance level (which is subjectively pre-determined by the central planning board, of course). As a logical consequence, communism creates a "bar" that noone is allowed to pass, pushing everyone to the level of a lowest common denominator. 100% equality in wealth lowers the amount available to each individual so much as to make everyone equally poor and starving. The more people there are under such 100% economic equality, the lower this lowest common denimonator of a non-living standard becomes. A quick glance at the history of communism should reveal this as rather obvious. The most "purist" communist view would contend that everyone should have 100% of their income taxed and 100% of their property owned "publically" (A.K.A. by the state), and then everyone is "equally" given "free" rationed services in exchange for this total confiscation of all private property. This ideal is absurd and dangerous. A communist society repeatedly sends the so-called "proletarien" this contradictary message: work, work, work, but you're not allowed to surpass anyone else by your abilities.

The practise of wealth equalization over time does nothing but diminish overall prosperity. It lowers the threshold for everyone. In capitalism, each individual is free to improve their own economic conditions without harming others. This may result in an unstatic and unequal distribution of wealth, but it is voluntary and peaceful, and it is not a pure pyramidical heirarchy, it is more random and sporatic. It is also liable to change over time (with some people at the bottom rising upwards, and some people at the top shifting back down). When this private accumulation and unstatic movement of capital is disrupted through forced equalization of such economic conditions, all that happens is that more people get less in the long-run. Equalization must inherently push down anyone who managed to achieve better economic conditions than others through their own abilities.

If the policy simultanously seeks to prop up those who's economic conditions are the lowest, this becomes negated by the lowering of the bar. Once they are propped up to a certain point, they are stuck, and thus have been assigned with a "fixed class" in reality. The poor are not given the oppurtunity to raise themselves up under such a policy, but rather their economic conditions are fixed in place, as to not go below or above "the bar". Under pure economic equality, there is no such thing as economic mobility (I.E. the prospect of people to raise themselves up or take cut-backs - any change in economic status over time) - people's incomes are simply "fixed" in a pre-determined place. Instead of getting rid of class, this creates a trend of fixing everyone into one "proletarien" class (while mysteriously exempting the government and special allies from this fixed caste; therefore the government is functioning as the exploitation class in reality here, not workers, employers, investors or savers).

One of the central truths of capitalism is that production alone is what creates wealth, a "standard of living" for the masses. Any policy that seeks to reduce everyone to substinance (I.E. eliminate all "capital", which is merely any property/wealth above substinance) is only crushing the middle class and increasing poverty. If you decrease capital, you are decreasing wages and increasing prices. To go after the one thing that actually produces "wealth" in the first place (production and the ensueing voluntary accumulation of capital) is counterproductive. Any policy that seeks to decrease the production of any group or individual will only decrease the overall standard of living, regaurdless of wether the targeted individuals are rich, poor or middle-class.

The market is simply voluntary mass-production of goods and services and voluntary exchange of those goods and services. It's that simple. It is not inherently "exploitation". When you go buy candy bar at the store, this isn't "exploitation". When you voluntary work based on a contract you initially agreed to, this isn't "exploitation", it's called a modern voluntary work force (as opposed to conscription or syndicalism). A surplus (I.E. profit) is not a robbery from people, it is the surplus revenue created by the process of voluntary cooperation under the division of labor. Yet the socialists would have us believe that profit and private buisiness in general is inherently "theft".

Without the profit mechanism, and it's often forgotten counterpart of loss, there would be nowhere near enough production to provide mere substinance for most Americans. Like it or not, we rely on capitalist production to feed, cloth and shelter the masses. Most people would simply slowly starve to death without it. Without any profit and loss, it is impossible to invest properly as to increase productivity - economic calculation is completely impossible. An increase in the supply of goods and services and hence an increase in productivity is the only way to genuinely increase the standard of living (in the form of real wages, lower prices and hence more available goods and services) for the masses at large. Attempts to hamper the market are only decreasing productivity, and hence decreasing the standard of living.

The profit and loss mechanism is speculative and uncertain, since it deals with factors that change over time. If a buisiness produces in exess of demand, it starts to take losses (for every produced item not sold) and will eventually go bankrupt if it continues with such a method of production. Thus, in such a situation, the buisiness must change its mode of production (a simple example for this scenario would be to produce less or to change the quality of the product or service as to stimulate more purchases). If a buisiness does not produce enough to appease demand, it starts to take losses (since barely anyone is buying their good or service) and will eventually go bankrupt if it continues with such a method of production. Thus, in such a situation, the buisiness must change its mode of production (a simple example for this scenario would be to produce more or change the quality of the product or service as to better square with demand).

It must be kept in mind that all of this is rather speculative on the part of the enterpreneur. The capitalist can never be certian because demand may easily change, and thus they may have to adjust their methods of production further. The capitalist has to constantly adapt in order to maintain a profit. The method of government protectionism is what grants various buisinesses the privilege to circumvent this market process by being gauranteed bail-outs, blatant give-aways and the crippling of their competitors. On the market itself, free from any government intervention or special protection, it is impossible for a capitalist to maintain a policy of arbitrarily raising their prices irrespective of the demand curve or supply or method of production. They will always come to a point where they have to change their methods of production or face losses. Thus, the common picture of the greedy capitalist's arbitrary greed being the reason for price hikes, and as someone who does nothing but hike prices, is nonsense.

The workers in a relatively unhampered market are not slaves. They are beneficiaries (of their own abilities), and their production is part of a network of cooperation that results to the benefit of others (the people who consume and depend on what they produce, and their employer, who then can use extra capital to invest in capital goods that increase productivity, and hence this increased productivity increases wages for employees), and the masses in general when accumulated and viewed on a macro (and time-dimensional) scale. The free worker can voluntarily agree to a job contract and voluntary quit that job whenever they please. The free worker also is more or less the burgeoisie to the extent that their wages supply them with any amount of income above what is necessary to maintain basic substinance - every "non-essential" to basic survival that they consume (such as computers, cellphones, televisions, cars, stereos, CDS, books, etc. - in short, material possessions that justabout everyone in the "middle class", and even poor, has) reflects the extent of their "burgeoisieness". Their unhampered wages tend towards the marginal revenue created by their productivity as individuals (the cumulative value of what they produce in a given hour). For example, if Jones must produce widgets, with each widget being worth 50 cents, and he produces 20 widgets in an hour, then his marginal revenue product is 10 dollars in one hour. Ideally, his wage should therefore be 10 dollars an hour.

Now, due to time-dimensionality and change, one's wage may not always precisely equal the margin revenue product, because supply and demand changes over time (and therefore the revenue of the product is prone to change). This is also true because a worker can vary in their enthusiasm: they can work really hard on a particular day, thus producing more, or they can slack on a particular day, thus producing less. However, the "equilibrium tendency" that results from a voluntary job tends towards the direction of the marginal revenue product over time (and the best way to do this is to develope an analysis of the "median" productivity of a worker over a given period of time, and thus the average is the MRP). The capitalist who best calculates the marginal revenue product both makes the most profit and gives the most fair wage to the employee. If a wage is above the marginal revenue product, then the employer starts to take losses. For example, if the government were to pass a wage law making the employer pay Jones 20 dollars an hour for producing a marginal revenue product of 10 dollars in an hour, the employer would be taking a loss of 10 dollars for every hour Jones works, or a loss of 25 cents per widget produced.

What kind of buisiness would want to function at a loss? As a consequence, there will be an incentive for the employer to simply fire Jones. Thus, the more jobs there are that pay higher than the marginal revenue product of labor, the quicker those same jobs become emptied out, and hence there is unemployment in those areas. By the very least, since the employer is taking losses for every worker, they will seek to substitute more jobs at other wage rates than the ones at the artificially inflated wage rate, as to minimize the losses. For every new worker that is added on onto the payroll at the inflated wage, the employer will lose more and more. The people who are at that margin are simply barred from employment due to the legal hike in wages. All of the Jones's in society have an increased unemployment rate. Employers would rather pay people the same or a generally higher wage who's marginal revenue product actually equals the wage. Thus, the security of higher-income people is secured while the people with lower productively levels are slowly disemployed altogether. Further, this unemployment bars low-skilled workers (which largely consists of teenagers and young adults) from the experience that would lead them to increase their productivity and mature, and hence achieve higher-paying jobs in the future.

Let us suppose another scenario. If the wage is below the marginal revenue product, how can this reach towards equilibrium? Let's actually assume that the employer wants to exploit the workers (a questionable premise, but granted for this example). Suppose our employer, capitalist pig A, pays Jones only one dollar an hour instead of the 10 dollars of his marginal revenue product. Here we get into some competition. What do you think the incentive of capitalist pig B is? He may very well pat capitalist pig A on the back and support exploiting workers too, but he wants more workers for himself. Therefore, what kind of offer can capitalist pig B make to potential workers? He could make an offer of a wage of 1.01 or 2 dollars an hour. What do you think capitalist pig C's incentive is? 1.03 o 3 dollars an hour. Capitalist pig D? 1.04 or 4 dollars an hour. Etc. Etc. Etc.

Of course, this isn't an exact illustration of how it happens over time (it obviously wouldn't be in completely even intervals), but nonetheless demonstrates that the equilibrium tendency kicks in, and thus employees essentially hike wages up towards the direction of the marginal revenue product. If this process continues, we will pretty much reach the MRP. It is simply unprofitable to have unenthusiastic workers, and there is no better way to encourage worker enthusiasm than to offer a higher wage. If employers continue try to get away with such exploitation over time, they will simply run out of willing workers, and hence go out of buisiness. Thus, the works themselves also can initiate the process. For example, if Jones is working for 1/10th of his margin revenue product (1 dollar an hour), and he finds out that his friend is making 5 dollars an hour over at such and such a place, then he has an incentive to quit and seek such better jobs. The capitalist who truly tries the most to exploit the workers in the way being described here is doomed to eventually drive away all of their employees.

All of the countries with the heaviest economic intervention (often in the name of equalty) have the lowest living standards. A simple analysis of East and West germany before the wall came down, or North and South Korea today, demonstrates this plainly using people of the exactly same culture, nation, language and ethnicity under two considerably different economic systems. The differences between the two are extraordinary. If you look at Korea from a map/telescope looking towards earth from space, you see darkness in the commie section, and lights in the non-commie section. That says it all. Communism is a system that simply eats up everyone's wealth and property. The soviet union had no real middle class - it had a slave class (former burgeousie turned proletarien) and a ruling class (the government and elites who allied with it).

A common juxtoposition that is used by opponents of capitalism is the use of example of governmental actions and allyships with buisiness as arguements against the market. But all of this is a government intervention in the economy! Capitalism is the lack of government intervention in the economy! To continually point to situations in which the government is intervening in the economy as an arguement against capitalism is nonsensical. The laizze-faire position is that if a firm incurs losses, it must adjust its methods or it will slip out of buisiness - it must pay its debts or go bankrupt. The laizze-faire capitalist actually maintains that it is an unjust government intervention in the economy to bail out banks or buisinesses when they go bankrupt. Indeed, inefficient firms and banks SHOULD go bankrupt. This is precisely why the market works - it weeds out inefficiency. To bail out firms incurring losses and debt is simply protectionism. Laizze-faire is the polar opposite of protectionism.

It is quite clear that the bulk of arguements against capitalism not only consist of total fallacies, but are in actual fact pitted against the common, working man. They seek to replace a diversity in luxury with no luxury at all, and in practise merely reduces everyone to an unsustainable substinance level (and hence the path of starvation and eventual death). It is not an agenda geared towards increasing the well-being of everyone, but rather decreasing the well-being of everyone in order to stop anyone from becoming any more happy, substinant or rich than anyone else. It uses the method of crippling man in his abilities while simultaneously claiming to make everyone into super-men. The people who actually constitute the burgeosie that this political tyranny cripples are just about everyone, and the majority of everyone constitute "the middle class". Therefore, the middle class are the burgeosie. The burgeosie isn't some evil cabal of rugged individualists who exploit everyone, the burgeosie is anyone who isn't suffering from utter poverty (the majority of whom is the "common man", the middle class workers and buisiness-owners), and thus it is an admirable and good thing. Most everyone in the world are capitalists by the mere fact that they have any property or wealth at all.

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