Crisis, Class and Inequality

The current economic crisis continues to gather force. More than a half-million jobs were lost in each of the last three months, and recent weeks have also witnessed escalating foreclosures on homes. Yet far too little discussion has taken place about trends of income inequality, and Democratic rhetoric pointing to the Republican failure to regulate does not penetrate the heart of our market society’s problems. While the roots of the current crisis are complex, the inability of a middle-class family to sustain a middle-class lifestyle without piling up credit card debt and mortgages is a critical distributional component of this economic crisis. We are confronted with two facts: the failure of our unfettered capitalist economy to provide the good life promised by the apostles of the gospel of Milton Friedman, and the shocking irresponsibility of those who have reaped the benefits of growth in productivity and efficiency over the past 30 years.

We at Columbia have very little connection to the real world. Arriving from the rural Midwest as a freshman, I was shocked to find my fellow students describing themselves as “middle class.” I discovered that anyone whose parents were not CEOs thought of themselves as middle class. To me, these kids were all rich. For a while I gained a bit of humor from finding out how much my fellow students thought an average middle class family earned. Answers typically ranged from $90,000 to $150,000 annually. Median household income is actually about $50,000, and 90 percent of households make less than $136,000 annually. Attending Columbia on a full ride through financial aid (there are a few of us out there), I am still relatively privileged; my family’s income is still above the median.

With all of our efforts towards “diversity” at Columbia, we are still a privileged institution serving a wealthy clientele and training cadres of the future elite. At the 146 most selective schools, students from the bottom income quartile compose a token three percent of the student bodies. Despite lip-service, few schools have done anything substantive to address this issue. The one exception is the brave initiative taken by president Tony Marx at Amherst to institute a far-reaching class-based affirmative action program. Marx has fought a long and difficult battle against skepticism and opposition. It is remarkable that elite institutions remain willing to lower their academic criteria for legacy and athletic admits but feel that making room for working-class students is an unworthy priority.

Perhaps things are changing. Who could have imagined three years ago that Americans would cry out for salary caps for CEOs? Indeed the increase in CEO compensation has been dramatic, one of the most widely publicized features of increasing inequality in American society. While the average white-collar worker earned about $38,000 annually in 1970 and $40,000 in 2000, in that time frame, the average compensation for the top CEOs had increased from $1.5 million to $40 million annually. Blue-collar workers earn less than they did in 1970. Universities are no exceptions. At private and even public institutions, university presidents demand salaries comparable to CEOs, driving their pay-grade well past six-figures. Our own Lee Bollinger takes home a hefty $1.4 million, after taking a half-million boost that may not look so expedient during a period of endowment contraction and university-wide retrenchment.

With market-fundamentalism discredited, and with growing inequality, from what directions can we hope to find our intellectual bearings? One of the most penetrating and least known students of market societies was Karl Polanyi. For Polanyi, society and the market could only have an uneasy coexistence. He recognized the immense creative power of market institutions, but he also understood their instability. The market had to be harnessed and restrained by society, according to Polanyi, otherwise it would annihilate the very social fabric of human life. Yet capitalist societies have persistently thrown up world-views that insist that society should be run as an adjunct of the market. Stability, predictability, and basic protections are necessities of human life, but not of markets. And thus we have the capitalists crying for welfare, too, because they, as Polanyi understood, “are too big to fail.”

If human beings were commodities like any other, the models of the market fundamentalists might function within certain limits. The problem, Polanyi understood, was that capitalism rested on the “fictitious” commodity of labor: human beings (and their labor) could not be sold, traded, exchanged, warehoused, shipped and disposed of as other commodities could. Human beings have moral worth, and we share collective ethical responsibilities.

Exposing and fighting inequality must be part of our response to the current crisis, and giving organized labor more power is crucial to breathing life into our democracy, curbing inequality, and fighting the commodification of human labor. With Walmart announcing an increased dividend from bonanza recession profits, now should be the time to organize the big retailers. Passage of the Employee Free Choice Act is valuable, and the lines of conflict are already being drawn with Warren Buffett’s recent denunciation of this effort to give working people more dignity and power on the job. Yet a commitment beyond legislation is necessary. We must remember that we are not simply an economy structured by market incentives—we are a democratic society of human beings.

Rudi Batzell is a Columbia College senior majoring in history and sociology. He is an editor for El Participante, a member of Lucha, and the editor and chair of Columbia Undergraduate Journal of History. History and Politics runs alternate Wednesdays. opinion@columbiaspectator.com