Who Rules America

A substantial number of Americans, some two-thirds, view the government as being "run by a few big interests looking out for themselves." The results of the University of Michigan's poll raises an important question, one which cannot be easily dismissed by pundits who try to cast an illusion of American democracy; a nation ruled "by the people for the people". Just who rules America? In his class relations study, Michael Zweig found that the majority of Americans are in the working class. So It should come as no surprise that 60% of Americans feel alienated from economic and political decision making when, as Zweig estimates, it makes up 60 percent of the U.S. workforce.

Modern capitalistic society is characterized by three main classes: an elite and small capitalistic class who own and manage large income-producing properties; i.e., corporations, banks, real estate and agri-businesses, a large working class who do not have their own means of earning a livelihood and must sell their labor power to earn an income, and a middle class of professionals, entrepreneurs, and managers that reside between the two. So just who rules America? Who are the "big interests looking out for themselves? They are as G. William Domhoff states are "the owners and managers of large income-producing properties; i.e., corporations, banks, and agri-businesses, along with the the managers and experts they hire".

The Social Upper Class
Michael Useem in The Inner Circle states, "The upper class consists of the social network of established wealthy families whose status is preeminent , whose culture and identity are distinct, and whose membership is closed to nearly all but those of proper descent". Generally speaking, wealth can be defined as the ownership of marketable assets such as stocks, bonds, and real estate. Income is the amount of wages, dividends and interest paid out to an individual yearly. The people commanding the greatest wealth and highest income are part of the upper class. The .5 to 1 percent of the population that makes up the upper class is also the .5 to 1 percent who owned 39.7 percent of the financial wealth in 2001.

	Financial Wealth
	Top 1 percent	Next 19 percent	Bottom 80 percent
1983	42.9%	48.4%	8.7%
1989	46.9%	46.5%	6.6%
1992	45.6%	46.7%	7.7%
1995	47.2%	45.9%	7.0%
1998	47.3%	43.6%	9.1%
2001	39.7%	51.5%	8.8%

The upper class has it's own exclusive social institutions which include private schools, summer resorts and retreats, and social clubs and gatherings. Large and well known Ivy League schools such as Harvard, Yale, Princeton, Columbia and Standford are heavily populated and favored by the upper class in receiving distinctive education. As a result, social clubs also play a unique role in differentiating members of the upper class from other members of society. Membership into these clubs can range from a few to tens of thousands of dollars, as well as being subject to a rigorous screening process. The Links in New York, Pacific Union in San Francisco, Chicago Club in Chicago and the infamous Bohemian Club in San Francisco are a few social clubs with a high concentration of members from the corporate community. The 25 largest industrials have one or more directors as members in one or more of these clubs. Highlighting how the upper class is closely interwined with the corporate community.

The Corporate Community
The nationwide upper class is not only a social class but a economic class deeply rooted in the corporate community. G. William Domhoff states, "Several studies show that those 15-20% of corporate directors who sit on two or more boards, who are called the "inner circle" of the corporate directorate, unite 80-90% of the largest corporations in the United States into a well-connected "corporate community". Chase Manhattan Bank has 45 such connections to other corporations and financial institutions, Wells Fargo Bank has 41 and General Motors 33.

Exxon, the world's largest oil company, contains a large concentration of "interlocking directors". For example, according to Endgame, James R Houghton is not only on the board on Exxon, but is also Chairman and CEO of Corning Inc, on the boards of MetLife, Inc, Corning Museum of Glass, Metropolitan Museum of Art, Pierpont Morgan Library, Harvard Corporation, member of Business Council and Council on Foreign Relations.

This highlights the fact that despite competition among the corporate community, there exists cohesion due to their opposition to the liberal labor coalition, anti-corporation and anti-globalization activists, leftists and environmentalists, which derives from their common goals and values and pursuit of profit.

The Policy Formation Network
The corporate community and upper class are supplemented by a wide range of nonprofit organizations such as think tanks, foundations, and policy discussion forums, which itself forms a policy formation network. These institutions play a critical role in creating debates over public policy and in shaping public opinion. The corporate community and upper class have the ability to dominate these organizations due to the fact they were founded by members of the upper class and are funded by large corporations. The Ford Foundation, the Rockefeller Foundation and the Carnegie Corporation are the most highly influential of foundations. Brookings Institute, The American Enterprise, Business Council, Business Roundtable and the Urban Institute are a few of the more important think tanks and policy groups. In fact, the Business Roundtable was highly influential on the corporate community victory of NAFTA. Policy discussion groups bring together directors, managers, government officials and other wealthy or influential people to discuss local and international issues, as well as political, social and economic issues. These groups frame the debate and set the terms for new economic, foreign and other policies.

So Who Rules America?
Despite competition among the corporate community and threats of hostile takeovers, there exists a cohesion rooted in a strong class consciousness which derives from profit motives and capitalist class interests. "Through open and direct involvement in policy planning, through participation in political campaigns and elections, and through appointments to key decision-making positions in government" the upper class are able to rule America and influence decisions affecting the bottom 80% of the population. This power stems from their great concentration of wealth which is derived from ownership and control of large income proudcing corporations. As Domhoff states allowing corporate leaders to "invest money where and when they choose; expand, close, or move their factories and offices at a moment's notice; and hire, promote, and fire employees as they see fit. These powers give them a direct influence over the great majority of Americans, who are dependent upon wages and salaries for their incomes. They also give the corporate rich indirect influence over elected and appointed officials, for the growth and stability of a city, state, or the country as a whole can be jeopardized by a lack of business confidence in government."


Suggested Reading:
Who Rules America by G. William Domhoff
The Inner Circle: Large Corporations and the Rise of Political Activity in the U.S. and U.K. by Michael Useem
The Founding Fortunes: An Anatomy of the Super-Rich Families in America. by Michael Allen
Top Down Policymaking by Thomas Rye
The Power Elite. C Wright Mills
Democracy for the Few Michael Parenti

-blackstone

Centrally Planned vs Participatory Planned Economies

Participatory planning allows participants to exercise direct democracy and allows ordinary citizens to control their own lives. Citizens of a post-revolutionary society will be organized into federations of workers and consumer councils. Workers in worker councils need to articulate proposals on what and how much they want to produce, as well as the resources needed for production. Consumers, on the other hand, will need to express through proposals what and how much they intend to consume. Both production and consumption proposals will be sent to the facilitation board where through a system of proposals, amendments, and rejections, a social plan articulated to cover the entire economy is hashed out.

Let's be like Frank Lucas in American Gangster and cut out all the middle men.

The institutions of a participatory economy embody the values of efficiency and effectiveness that we seek. The institutions of a centrally planned economy however, no matter how valiant our efforts, no matter how beautiful are rhetoric, negate and hamper the realization of these values to take form.

Let's take a look at how central planning can be inefficient and ineffective. All which can be viewed in the history of China and Russia's usage of it.

But, first we must realize that a nation's(or regions') economy is an integrated affair. Therefore, any decisions about production in one industry will have ripple effects elsewhere. This is due to the simple fact that the output of one industry can serve as an input towards another , and thereby makes one industry dependent on another. This integration of industries can be represented through the usage of an input-output matrix.

Input Output Table

Industry	Metal	Coal
Metal	0	.4 tons
Coal	2 tons	0

Suppose through a democratic and participatory process of proposals, requests, rejections, and amendments, a social plan articulated to cover the entire economy is hashed out. One in which it articulates the need for the Coal industry to produce a net output of 200,000 tons of coal and the Metal industry to produce a net output of 50,000 tons. Suppose, coal is required to produce metal and some amount of metal in the form of tools is required to produce coal. To produce 50,000 tons of Metal requires 2(50,000)=100,000 tons of coal. Likewise the production of 200,000 tons of coal requires (0.4)(200,000)=80,000 tons of metal.

Your factory makes cars. There is a demand nationally for the cars you produce. This is known due to the fact of people putting in requests for cars through participatory consumption planning. Yet, we know that the requests and the production of cars has ripple effects. There is a finite amount of resources available to us to produce cars, as well as other products that rely on the same resources. However many cars we make, we can't use the steel and other material for other products. This also extends to human resources as well. The people assembling the cars won't be available to do other work.


There's a finite amount of resources, that goes for labor, time, natural resources, etc. What we had in Russia and China was resources being over committed. Central planners were committing more resources than were available, so there were persistent shortages. And these shortages weren't prone to one industry, but because an economy is integrated it affected other production units.

But that can be avoided with participatory planning and the elimination of the roles of central planners. People express their priorities through the usage of workers and consumer councils, and federations of these. This prevents overproduction and potentially useful products being wasted. Participatory planning is the more efficient in gauging the priorities and needs of the people, than central planning could.

Moreover, the government(centrally planned) established fixed prices for all inputs and outputs based on the role of the product in the plan and on other noneconomic criteria. The prices did not reflect the supply and demand or relative scarcity of the product. Shortages occurred and prices were established too low which resulted in allocation inefficiency and ineffectiveness. So, what we had was some outputs being cheaper than the inputs used to produce it! For example, bread was cheaper than the wheat needed for its production!

Yet, that can be avoided with participatory planning and the elimination of the roles of central planners. People express their priorities through the usage of workers and consumer councils, and federations of these. This prevents inefficient allocation and goods being over or undervalued which can cause scarcity or overproduction. Participatory planning is the more efficient in gauging the priorities and needs of the people, than central planning could.

In central planned economies, managers were rewarded for meeting assigned goals. Can you see the problem here? In Russia and China, managers manipulated and lied about reaching production goals in order not to be reprimanded and to live the good petite-bourgeois lifestyle. But, remember, economies are integrated. Looking at the input output table i have above, if managers in the coal industry are lying about reaching their output goals or manipulating data, this effects the steel industry, who uses that input to produce steel. This decreases the steel intended target, which affects bike makers, car makers and all other industries that use steel as an input.

Not very efficient or effective, huh?

But that can be avoided with participatory planning and the elimination of the roles of central planners. People express their priorities through the usage of workers and consumer councils, and federations of these. Worker's self-manage these work units, information is democratized the decision making process is democratized with each actor influencing decisions in proportion in which they are affected by them.This prevents inefficient allocation and goods being over or undervalued which can cause scarcity or overproduction by managers manipulating data. It would be more beneficial to the workers of the work unit and society as a whole to report accurate data. Again, participatory planning is the more efficient in gauging the priorities and needs of the people, than central planning ever could.

Cheers
blackstone

Putting Reparations on the Socialist Agenda

According to the International Monetary Fund(IMF), in 2006 the United States of America had a GDP of more than $13 trillion and thus ranking it as the largest national GDP in the world. GDP, or gross domestic product, is the value of all final goods and services from a nation in a given time period. Yet, this wealth is becoming gradually concentrated as yearly statistics show. According to State of Working America, in 2004, 12.7% of the population, 37 million persons, were considered poor. Not only is wealth in America unequally distributed, but poverty is as well also, with 30 percent of Blacks being poor, 20 percent of all Hispanics, but only 9 percent of Whites. How did America generate and continue to generate this vast amount of wealth and is there a connection between that process and it's disproportionate allocation?

Slavery and Primitive Accumulation of Capital

Primitive, or "original accumulation", refers to the initial process that led to a 'critical mass' of accumulation that enabled capital to be set in motion. It's a concept developed by Karl Marx to explain how the capitalist mode of production came into fruition. Marx says we must envision an accumulation of capital that was not a consequence of capitalist production but was the starting point of capitalist production. He called this "primitive accumulation of capital".

So what is this primitive or original/previous accumulation of capital? According to Marx it was the,

discovery of gold and silver in America, the extirpation, enslavement and entombment in mines of the indigenous population of that continent, the beginnings of the conquest and plunder of India, and the conversion of Africa into a preserve for the commercial hunting of blackskins, are all things which characterize the dawn of the era of capitalist production. These idyllic proceedings are the chief moments of primitive accumulation. [Marx 1977, p. 915]

Capitalist development was due to the brutal exploitation of Blacks and indigenous people as consumers and workers. African slaves were forced to perform free labor for almost 250 years. Karl Marx notes,

Direct slavery is just as much the pivot of bourgeois industry as machinery, credits, etc. Without slavery you have no cotton; without cotton you have no modern industry. It is slavery that has given the colonies their value; it is the colonies that have created world trade, and it is world trade that is the pre-condition of large-scale industry.
-The Poverty of Philosophy: A Reply to M. Proudhon’s Philosophy of Poverty, New York, International Publishers, n.d., pages 94-5.

This constant expropriation of surplus value, at a high rate of exploitation, was the driving force behind capitalist development, as well as the underdevelopment of Africa, Asia and Latin America. Where did the reproduction and growth needed for capital investment come from after the abolishment of slavery?

Abolition and Permanent Accumulation of Capital

After the abolishment of the slavery mode of production in the South, the United states still continued to generate wealth. Rosa Luxemburg proposes that the cause of this continual generation of wealth is due to what is called, permanent accumulation of capital. The difference between Marx and Luxemburg is that, for Marx, primitive accumulation is the starting point for capitalism proper, whereas for Luxemburg it is an ongoing process. Even after Black Americans were "freed", they still were subject to economic exploitation and political disenfranchisement. This was accomplished by the racist/capitalist state through, but not limited to, Black Codes, convict lease, peonage, Jim Crow laws as well as institutional racism. The rate of exploitation was higher for black workers than white workers, allowing capitalists to accrue higher profits from black workers than their white counter-parts. This discrepancy still occurs today, according to State of Workign America, "For every dollar of whites’ income, minorities receive only 56 cents. For every dollar of networth that whites control, minorities control only 27 cents."

A Call for Reparations

The National Coalition of Blacks for Reparations in America(NCOBRA) views reparations as a "process of repairing, healing and restoring a people injured because of their group identity and in violation of their fundamental human rights by governments or corporations. Those groups that have been injured have the right to obtain from the government or corporation responsible for the injuries that which they need to repair and heal themselves. In addition to being a demand for justice, it is a principle of international human rights law. As a remedy, it is similar to the remedy for damages in domestic law that holds a person responsible for injuries suffered by another when the infliction of the injury violates domestic law". Economist Larry Neal, estimates that unpaid net wages to blacks before emancipation amount to $1.4 trillion today. While, University of California at Berkeley calculated the gains of whites from labor market discrimination from 1929 to 1969 to total $1.6 trillion. In total, there are estimates that blacks are owed up to 10 trillion by the US government. Yet, through all of NCOBRA's legal routes and tribunals , blacks have yet to receive any compensation. Nor, is it for certain that the government ever will.

Revolution is the Solution

There is a direct correlation between the development of capitalism and the underdevelopment of Black America. The exploitation of blacks if the motor for the United States rapid accumulation of capital. The high rate of exploitation, combined with the expropriation of surplus value from black labor is not only the cause of America's vast amount of wealth, but also the reason why that wealth is disproportionately allocated. Therefore, it is in the best interest of the capitalist class to continue to accumulate profit through division of labor according to race. The legal route for reparations and the development of Black America is a dead end. The only solution is a socialist revolution.

In that sense, reparations for Africans and indigenous people must be included on the socialist agenda. The only way compensation and development will be achieved is through the destruction of the vary economic system and state apparatus that is the cause of the underdevelopment of Black America. One of the first tasks of a socialist society would not only to meet the basic needs of the people, but to develop historically oppressed communities. The socialist society will give preference to developing these areas not to recreate inequality, but to raise the standards of life for everyone in society. This task cannot be completed in a capitalist society, but only a post-revolutionary socialist one.

Cheers.

"Four hundred years the white man has had his foot-long knife in the black man's back - and now the white man starts to wiggle the knife out, maybe six inches! The black man's supposed to be grateful? Why, if the white man jerked the knife out, it's still going to leave a scar!"
-Malcolm X

The question of Use Value In Marxian Economics

I'm going to repost the basic summary of Marx on scarcity from Chapter One of Das Kapital,

The value of a commodity would therefore remain constant, if the labour time required for its production also remained constant. But the latter changes with every variation in the productiveness of labour. This productiveness is determined by various circumstances, amongst others, by the average amount of skill of the workmen, the state of science, and the degree of its practical application, the social organisation of production, the extent and capabilities of the means of production, and by physical conditions. For example, the same amount of labour in favourable seasons is embodied in 8 bushels of corn, and in unfavourable, only in four. The same labour extracts from rich mines more metal than from poor mines. Diamonds are of very rare occurrence on the earth’s surface, and hence their discovery costs, on an average, a great deal of labour time. Consequently much labour is represented in a small compass. Jacob doubts whether gold has ever been paid for at its full value. This applies still more to diamonds. According to Eschwege, the total produce of the Brazilian diamond mines for the eighty years, ending in 1823, had not realised the price of one-and-a-half years’ average produce of the sugar and coffee plantations of the same country, although the diamonds cost much more labour, and therefore represented more value. With richer mines, the same quantity of labour would embody itself in more diamonds, and their value would fall. If we could succeed at a small expenditure of labour, in converting carbon into diamonds, their value might fall below that of bricks. In general, the greater the productiveness of labour, the less is the labour time required for the production of an article, the less is the amount of labour crystallised in that article, and the less is its value; and vice versâ, the less the productiveness of labour, the greater is the labour time required for the production of an article, and the greater is its value. The value of a commodity, therefore, varies directly as the quantity, and inversely as the productiveness, of the labour incorporated in it.

http://marxists.org/archive/marx/works/1867-c1/ch01.htm


Now, on to your question,

In essence rarity does play a role since considerable labor time is required to extract it, then it gets further work in polishing and setting in rings, etc., which is more labor time. Yes, I understand labor time and its importance in determining cost while it take the seller to set the price. The seller is the capitalist. Is it the labor that mades a diamond valuable or it's use value? What was its use value in Marx's day. I still tend to believe that it's rarity made it valuable rather than it usefullness

First, diamond has potential value, as many natural resources and untreated raw materials.

Remember the duality of a commodity. It has a use value, which satisfies a need and an exchange value.

As long as diamond remains buried deep in a mine, it is useless. It first must be located, then extracted and transported for use.

Remembering the duality of a commodity, the diamond must have a use value. It, has no utility remaining deep inside of the mine.

If it has no utility then it has no exchange value.


C= Commidity
V= Value
U= Utility

C=VU
if

C=V(0)
then V is 0 as well.

Use value adds nothing to the value of an object. No matter how many bourgeois economists want you to believe, you can not calculate use value.

An object either has use value or it doesn't. So the use value will either be 1 if an object has utility or 0 if it does not. If a object has no use value, it has no value.

As Marx says in that passage quoted,

The value of a commodity, therefore, varies directly as the quantity, and inversely as the productiveness, of the labour incorporated in it

You also later asked,

Good point about leaving it for a later study. Diamonds are a good example. Why did they have value in Marx's days? Were they used in industry or was the value based mostly on beauty and rarity?

The use value of diamonds and Marx's day, is the same as it is in this day. Either 1 or 0. Since diamonds have been purchased endlessly since the the 1800s, the use value of diamonds has continued to be 1 for those who found utility in them.

I hope i made things clear. To reiterate.

* A commodity has to have utility in order to have a(n) (exchange) value.
* Utility, whether an object has a use value, is is mathematically represented as a 1 if it proves useful and 0 if it has no usefulness. If a commodity's utility is 0, so is it's value.