Mobilization of Bias
0 Decisions made by business firms usually considered
nonpolitical or private
0 Should be considered political because they deeply impact
society
0 Society depends on what business can deliver
0 Gives them unique advantage in political arena
0 Elected officials under enormous pressure to offer
inducements to business (land, patents, tariffs, tax breaks,
subsidies, training, military, bailouts, etc.)
0 Mobilization of bias = distinctive political advantage
business enjoys by virtue of economic power (ownership
and control of productive system); but, not total…
0 Companies compete with each other, often have conflicting
interests
0 Democratic procedures require policymakers to respond to
many pressures/interests beyond business
Changing Landscape of
American Capitalism
0 Corporate capitalism includes country’s largest mining and
manufacturing companies, investment banks, financial services
firms, retail chains, utilities, high-tech companies, media
companies, and corporate law firms
0 see figure 2.1, p. 40, Top 20 Fortune 500 companies
0 Tend to be capital intensive, highly productive, diversified, global
0 In recent decades, structure of American economy has changed
0 competition has intensified due to globalization (more open
markets) and technological innovation (transportation and
communication)
0 mergers have created huge corporations
0 Especially pronounced in media (p. 42) reducing independent, not-
for-profit media
0 As production becomes concentrated, control becomes
centralized in fewer hands
0 A threat to democracy = concentration of economic power tends
to promote concentration of political power
Who Owns America’s Private
Government?
0 Do we have a “share-holder” democracy?
0 Half of American households do not own stock (either directly or indirectly
through mutual funds, retirement plans)
0 (2004) wealthiest 1% of American households held 37% of all U.S. stocks
0 Next wealthiest 9% own 42% of stocks
0 One household in ten owns 4/5 of value of all stocks
0 Who own’s America’s private government? = one-tenth of the population
0 Corporate elite = white and male
0 Capitalist class cohesion
0 Social clubs (prep schools, private colleges, law/business schools, corporate
headquarters; elite socialization)
0 Peak associations (interest groups such as the Business Roundtable, Chamber of
Commerce, National Association of Manufacturers, etc.)
0 Corporate interlocks (board members serving on multiple corporate boards)
0 Tiny group of Americans (vast income and wealth) own America’s private
government and are better situated than vast majority of citizens to shape
political system to serve their interests
Changing Structure of
Employment
0 Workforce shaped by changing needs of capital
0 In recent decades, industrial occupational order (manual, blue-collar
factory jobs) replaced by postindustrial order (professionals, service
employees, and white-collar workers)
0
0
0
0
See figure 2.2, p. 47
Good and bad jobs grew at expense of middle
Huge growth in financial sector
Service and sales jobs tend to be poorly paid, few benefits, require menial
and routine labor, and rarely union protection
0 Income inequality in U.S.
0 (2007) top 1/5 captured ½ of all income; bottom 1/5 received 3.4%
0 Richest 5% received 21% of all income
0 Political choices play key role in shaping inequality (see figure 2.3, p.
49)
0 Markets tend to generate inequality and compensate unskilled labor with
poverty-level wages unless checked by political/public forces
0 In U.S. these forces are weak = labor movement is tiny, parties skewed to
the right, government unresponsive to interests of low-income groups
America’s Extreme Market
Capitalism
0 Public sector is quite small
0 State, local, federal employment account for 15% of nation’s workforce
(as compared to ¼ to 1/3 in other rich democracies)
0 Low proportion of GDP collected in form of taxes
0 U.S. government spending as share of GDP is low
0 Federal and state governments provide relatively few public services
0 Few constraints on business firms
0 Corporate management mostly decides who gets what, where, and how
0 Government regulation of the workplace is thin
0 U.S. has among the lowest proportion of unionized employees of any
industrialized democracy (table 2.1, p. 52)
0 Helps account for income inequality
0 Caused by: failure to unionize in South; restrictive labor legislation placed
obstacles in way of union-organizing; opposition to unions by
corporations
0 Extreme market capitalism dominates our lives
0 Supercapitalism = roles as consumers and producers increased at
expense of importance of public sphere and role as citizens
Capitalist Instability and
Crisis
0 Instability a systematic, inherent, centrally important feature of capitalist
economy
0 Great Recession (2007-present)
0 High unemployment – hitting lowest income groups worst
0 Decline in stock market
0 Bursting of housing bubble
0 Three time bombs
0 Sub-prime mortgages
0 Leverage
0 Securitization
0 Lesson to take from crisis = government’s hands-off relationship to capitalist
economy is shelved when capitalism is in jeopardy
0 Stiglitz: socialism for the rich, losses socialized and profits privatized
0 Key question: whether enormous sums government provided to shore up
financial system are followed by substantial reforms that minimize chance of
similar crisis occurring again. The answer appears to be: No.
Critical Thinking Questions
0 Identify two ways American economic system can be
characterized as extreme form of capitalism. What are
advantages and disadvantages of this form?
0 Should government have provided large public funds
to bail out the banks in the 2008-09 financial crisis?
What are the pros and cons of its decision to do so?