Issue 4 - Summer/Fall 1996

From Cash Nexus to Needs Nexus: A Radical Response to Growing Poverty (page 1 of 2)
By Bruce E. Parry

In an article on the budget, the Wall Street Journal recently estimated the following cuts from 1995 in billions:

Housing & Urban Development 5.5 Health & Human Services 3.4 Education 2.3 Labor 1.6 Foreign Operations 1.5 Transportation 1.1 Energy & Water 1.5 Interior Dept 0.5 Agriculture & Rural Developmen t 0.5 Commerce Dept. 0.4 EPA 0.6 NASA 0.5

Given the spread of both urban and rural poverty, the danger of unemployment, and the tragic state of the environment and national infrastructures, there has to be some explanation of why every major political figure is calling for across-the-board cuts in the federal budget. How can cutting the budgets of the very areas that are in crisis solve the problems? The answers to these questions lie in the economic undergirding of our political system.

The economic changes taking place today are the result of replacing electrical-mechanical technology with electronic technology in production. The world economic order is so now intertwined that products cannot be made without cooperation among people around the globe, coordinated and controlled through satellite-based communications systems above earth with neither country or nationality.

Completion of international globalization was brought home by the downturn of 1974 and 1975. There were massive layoffs in auto, steel, rubber, glass, durable goods, textiles and other "smokestack" industries. Many of the workers never returned to those jobs. That downturn was the first domestic indicator of the changed world economy. It was both the harbinger of globalization arrived and the impetus to electronic retooling.

Electronic Revolution

The demand for computers and computing ability had been fed by globalization. Demand for integrated inventory, payroll, financial and accounting packages and international communications pushed companies like IBM to the peak of economic power and to the top of the Fortune 500. Bigger was better. If a mainframe did not suffice, supercomputers were available. Fast, versatile mini-computers began to make their mark in smaller organizations.

The first downturn was from 1979 to 1981[1] : major industrial companies retooled their plants with electronics. As a single example, General Motors closed its Baltimore Assembly plant, sent much of the workforce off to computer training, and rebuilt the inside of the plant with robots and electronics. After the renovation, the plant bore little resemblance to what it had been. Robots began the process by welding the body pans and frames. The machines that most closely resembled human workers automatically sprayed rubberized sealant in the gaps between metal parts as the cars rolled down the assembly line. The paint shop was replaced with automation. The workforce of thousands was reduced overall, by about 500 workers immediately, and by thousands more in later years.

Hundreds of thousands of industrial workers were thrown out of work. The work force in auto and steel has never been the same since. More than half the workers were gone in each industry. Detroit and Pittsburgh were symbols of the devastation. Those that continued to work were in economic combat: wage and benefit concessions, job reorganization and elimination, and retraining were the norm.

The industrial aspect of the electronic revolution was, perhaps, less visible than the rapid diffusion of personal computers, video and arcade games, microwaves and hundreds of other consumer items. Its effect was no less profound.

Breaking the Cash Nexus'

In the advanced capitalist countries today, there are factories, mills, plants, stores and even farms with virtually no labor. No one is putting the product together, or drilling, forging, molding, cutting or bending the parts. What labor there is, is technical: programmers, maintenance workers, machine overseers; inspectors with the technical expertise to make adjustments. Robots, computers, and machines, in the meantime, are performing what is normally considered work.

Shops like this produce electrical switches and cars, but they also reproduce themselves: there are factories where robots and computers produce robots and computers. Cybernetics, machines that produce machines that produce products, is the beginning of the "workerless society." These plants represent the future; they represent where production technology is headed. There is no economic or historical force to stop it.

The implications are profound. When robots create the products, there is no need for labor or the laborers that provided it. It is here that the Social Contract breaks down. The Social Contract is between capital and labor. Capital provides the jobs and labor provides the work. In return, capital pays wages with which workers provide for themselves and their families. The efficacy, fairness and even justness of this system have been argued for hundreds of years, but the basic Social Contract worked to the degree that it provided many, if not most, with the necessities of life.

Without workers, however, there is no basis for the Social Contract. If workers are replaced by electronics and therefore not needed in the work place, there is no basis for paying them wages. With no wages, there is no way for them to provide for themselves or their families. As hundreds of thousands are put out of work, there is added downward pressure on wages for those who are still employed. Wages fall and even those still employed are less able to provide. The Social Contract breaks down because the circulation of money in the Cash Nexus has been broken.

There are more jobs

This scenario has not played out in its pure form. There are more jobs now than ever. The U.S. labor force is 126 million and growing. Billions work around the globe. All-robot firms are still rare. There are programs to help those in need: public assistance, food stamps, public housing, and even soup lines and shelters.

There are a number of reasons. First, the process has just begun. Nevertheless, it has played out sufficiently for homeless people to be on the streets. Poverty continues to swell. While in rural settings, the homeless are more hidden, rural poverty still accounts for nearly half all poverty in the U.S.

Second, the U.S. is a world industrial power. It has been able to shift much of the burden overseas. Poverty in the Third World is long standing and deep. In Mexico, for example, some 60 percent of the population lives in poverty. About half of that is in devastating need, unemployed, homeless, malnourished and starving.

Third, a lot of capital has shifted from manufacturing to sales. This shift has generated jobs. Manufacturing jobs have always paid well; sales and service jobs are equated with minimum wage. Thus, while there are more jobs, wages are lower for those still employed. This is part of the reason that the number of jobs have increased.

The new poverty

Twenty percent of the homeless work; many work multiple jobs. They still cannot command sufficient resources to put a roof over their head and food on the table on a regular basis, let alone maintain their families. Poverty today results from human labor's base value being practically nothing. The value of labor in any market tends to hover to the lowest necessary level. In a competitive market, if workers are willing to work for less, the capitalist will lower wages to that level, given equal quality and adjusting for required education and other special training or skills. In today’s market, the level of wages is tending to equalize with the wages of robots. Robots, of course, do not receive any wages.

The devaluation of human life in modern culture that so often receives comment is a direct result of its falling monetary value in the market. Our commercial society values people by what they do, rather than who they are. Those who are prevented from working are not valued. Valueless labor also explains the political climate.

Perhaps the most devastating misbelief in America today is the idea that we do not live in a class society. Classes are properly defined in terms of people’s relation to production and distribution, not their wealth. Those who own businesses constitute the capitalist class. With stock ownership, pension funds, mutual funds and the like, identification is complicated, but since people do own businesses, they constitute an economic class. The capitalist class is the ruling class.

What does that mean? Virtually everyone knows how this country is run. Business runs it. Businesses make donations to the political campaigns of the candidates they like and those they do not like. The point is not to support the ones they like, but to make them beholden to their funders. Ross Perot, both a politician and the CEO of a major corporation, succinctly summed this up when he said, "When politicians are trying to get votes, they play every tune they can get their hands on. CEOs understand that: O.K, the politicians are going to have to punch us around a little bit to look like populists. But once they get in office, we own them because we funded them.[3]

Furthermore, the laws that are passed are often suggested and always influenced by lobbyists paid for by business. Political Action Committees (PACs) have merely raised the entire process of electing "public servants" and passing legislation to the level of commercial enterprise. It is regularly reported after every election, what the going price for elective position is, be it a Senate seat, a state legislative position or a mayoralty. It does not make any difference that anyone can play; not everyone has the money to play. Instead of "one person, one vote," the system has become "one dollar, one vote". More >>


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