The Invisible Handcuffs of Capitalism

How Market Tyranny Stifles the Economy by Stunting Workers

Michael Perelman

• Publisher: Monthly Review Press
• Year: 2011
• ISBN:
  9781583672631
• Topic: Volkswirtschaftslehre
• Subtopic: Wirtschaftsbedingungen

Mainstream, or more formally, neoclassical, economics claims to be a science. But as Michael Perelman makes clear in his latest book, nothing could be further from the truth. While a science must be rooted in material reality, mainstream economics ignores or distorts the most fundamental aspect of this reality: that the vast majority of people must, out of necessity, labor on behalf of others, transformed into nothing but a means to the end of maximum profits for their employers. The nature of the work we do and the conditions under which we do it profoundly shape our lives. And yet, both of these factors are peripheral to mainstream economics.

By sweeping labor under the rug, mainstream economists hide the nature of capitalism, making it appear to be a system based upon equal exchange rather than exploitation inside every workplace. Perelman describes this illusion as the “invisible handcuffs” of capitalism and traces its roots back to Adam Smith and his contemporaries and their disdain for working people. He argues that far from being a basically fair system of exchanges regulated by the “invisible hand” of the market, capitalism handcuffs working men and women (and children too) through the very labor process itself. Neoclassical economics attempts to rationalize these handcuffs and tells workers that they are responsible for their own conditions. What we need to do instead, Perelman suggests, is eliminate the handcuffs through collective actions and build a society that we direct ourselves.

CHAPTER ONE
The Anti-Worker Theology of Markets

The Theological Defense of Markets

Academic economists present a great mystery. How can they muster so much brilliance and intelligence to deny any suggestion of market imperfections? These dogmatic defenders of markets warn that any measures to address economic deficiencies—other than the knee-jerk remedy of expanding market powers even further—are certain to disrupt economic efficiency. Others may acknowledge market problems, but they insist that the root cause must be people’s personal shortcomings. The proper response is to demand more from the people, not the system.

This blind devotion to the market is a kind of religion. Like the adherents of many other religions, economists can be intolerant of those who do not accept their worldview. As Margaret Thatcher, the ultra-conservative British prime minister, popularly known as the “Iron Lady,” once explained, “Economics are the method. The object is to change the soul.”¹ This call for spiritual uplift inspired neoliberalism, an extremist mindset in which public policy must give way to the interests of the market.

However, when markets implode, and eventually they always do, many fundamentalists temporarily throw aside their faith in markets. They call on the government for support—never for selfish reasons, of course, but only to return the market to health once more. Once the crisis has passed, their absolute faith in the market is restored. As Charles Darwin once observed, “ignorance more frequently begets confidence than does knowledge.”² The stubbornness of market fundamentalism reflects a theological view that markets are an end in themselves rather than merely a means to an end. Even the mildest challenge to the market reeks of heresy. Edmund Burke, perhaps the most famous British statesman of the eighteenth century, set the tone for this theological defense of markets, confidently declaring, “The laws of commerce … are the laws of nature, and consequently the laws of God.”³ The Journal of Markets and Morality continues to promote this theological tradition.

From a less elevated perspective, business and political leaders commonly join the familiar litany of praise for the market, bandying about lofty terms: freedom, democracy, and justice, not to mention efficiency and prosperity. When first running for president in 1999, George W. Bush offered a simpler formulation, simply declaring that “trade and markets are freedom.”⁴

Surely, nobody could object to allowing people to enjoy freedom, democracy, or any other positive quality attributed to the market. Fundamentalists ask why anyone would be foolish enough to challenge the existing economic system, one that presumably represents the pinnacle of social organization—or at least it would, if ill-considered taxes and regulations did not interfere with what President Ronald Reagan called “the magic of the marketplace?”

But adults should not believe in magic. Despite Reagan’s fanciful rhetoric, the market is a harsh taskmaster. Frederick Winslow Taylor, the father of scientific management, famous for devoting his life to using a stopwatch to cut split seconds from workers’ tasks, gave a more realistic verdict of the modern situation, observing, “In the past the man has been first; in the future the system must be first.”⁵ Does this system really serve people’s essential needs? I do not think that it does. Let us begin to see why.

A Different Theology

Consider a different theology—an ancient Greek legend. A bandit named Damastes terrorized people near Eleusis in Attica. People called him Procrustes, or “The Stretcher,” because he compelled unwary travelers who fell into his hands to spend the night on an iron bed. He sadistically murdered his guests by stretching short men to fit the dimensions of the bed, or, if they were tall, cutting off as much of their limbs as necessary to fit them into the bed. His sadism supposedly turned the surrounding countryside into a desert. Procrustes’ reign of terror was eventually cut short when Theseus, a heroic figure who became king of Athens, subjected Procrustes to his own bed treatment.

Mythological references might seem out of place in a book on the economy, but economic language has become so perverted that reframing it in an unfamiliar context seems appropriate. After all, Taylor’s expression—“the system must be first”—suggested that the modern economy requires that people conform to its dictates. In effect, his stopwatch tightened the screws on the Procrustean bed.

German sociologist Max Weber, hardly a radical, vividly captured this harsh spirit of the Procrustean world, observing, “The market is the most impersonal relationship of practical life into which humans can enter…. Such absolute depersonalization is contrary to all the elementary forms of human relationship.”⁶ One of Weber’s most famous expressions is his metaphor of the iron cage (actually a mistranslation of a less poetic “shell as hard as steel”):

Today’s capitalist economic order is a monstrous cosmos, into which the individual is born and which in practice is for him, at least as an individual, simply a given, an immutable shell, in which he is obliged to live. It forces on the individual, to the extent that he is caught up in the relationships of the “market,” the norms of its economic activity.⁷

Contemporary rhetoric offers an excellent example of this market imperative. The word reform has become synonymous with the elimination of protections against unfavorable market outcomes. In effect, people must learn to adjust to the market rather than make any attempt to have the market adjust to people’s needs. Procrusteanism is the set of practices intended to force people to accept market discipline.

The Procrustean Heritage of Economics

Associating Procrusteanism with the market might seem jarring to many readers, but it has actually been part of a subtext of economics for centuries. Many early economists believed that because people are driven by potentially dangerous passions, the market offered a socially beneficial outlet for their urges.⁸ For example, Adam Smith, whose first book was about psychology, introduced his famous description of the invisible hand thusly: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”⁹ In the same vein, John Maynard Keynes wrote, “It is better that a man should tyrannise over his bank balance than over his fellow-citizens; and whilst the former is sometimes denounced as being but a means to the latter, sometimes at least it is an alternative.”¹⁰

Francis Ysidro Edgeworth, an influential Oxford economist, expanded upon the association between the passions and the market. Although he was less clear than Smith or Keynes about the market as an alternative to antisocial behavior, his basic message was unmistakable:

The first principle of economics is that every agent is actuated only by self-interest. The workings of this principle may be viewed under two aspects, according as the agent acts without or with the consent of others affected by his actions. In wide senses, the first species of action may be called war; the second, contract.¹¹

Economists in the eighteenth and early nineteenth centuries clearly understood that people would naturally resist employment as wage laborers if they could maintain themselves outside of the market. They proposed strong measures to deny people alternative means of support, including the confiscation of the land upon which people had traditionally provided for their own needs.¹² The intention was to make people so destitute they would be desperate to work for wages. Then, once wage labor became sufficiently common, people would begin to think of it as normal and take it for granted.

Once workers became habituated to wage labor, economists could ignore the coercive side of the market and treat it as a purely voluntary system. In the process, they banished any suggestion of either coercion or irrational behavior, except on the part of those who might be foolish enough to resist total engagement with the market. Here is how the Reverend Thomas Robert Malthus described the egalitarian relationship between workers and their employers:

The man who does a day’s work for me, confers full as great an obligation upon me, as I do upon him. I possess what he wants; he possesses what I want. We make an amicable exchange. The poor man walks erect in conscious independence; and the mind of his employer is not vitiated by a sense of power.¹³

Nonetheless, Malthus was not above recommending harsh measures to ensure that workers would be so destitute that they would have no choice but to accept the amicable bargains that would await them.

The brutal measures that were required to transform society to the point that people took wage labor for granted did obvious damage. However, once people accept market life as the norm, the Procrustean bed begins to fall from view. The ongoing negative consequences of markets became less noticeable. Even the people the system harms most directly come to accept it as natural, almost as if they were voluntarily donning a pair of invisible handcuffs.

These handcuffs, and their unintentional consequences, remain invisible, but that does not mean their damage is insignificant. As we shall see, so long as the causes of the alienation, insecurity, and powerlessness that go along with capitalism remain invisible, free-floating anger becomes common. Procrusteans have mastered the art of diverting this anger into a powerful reinforcement of the system.

There is another kind of damage. The Procrustean project of squeezing more profits out of people ultimately turns out to be self-defeating, so much so that it threatens the health and vitality of society, along with the very economy it is intended to promote.

Beyond the Procrustean Economy

In the spirit of Weber—at least the mistranslated Weber—the market functions as a Procrustean bed. Why would anybody willingly lie down in such a bed? Those who accommodate themselves to the system often suffer a cruel fate, as the discussion of workplace deaths and diseases in chapter 3 will demonstrate. However, the system punishes those who refuse to adjust themselves voluntarily to it. This helps people to come to see this world as natural and allows overt Procrustean control to be largely replaced by the invisible handcuffs.

At times, however, when Procrusteans overplay their hands or the system malfunctions, the handcuffs become visible once again. As was true before capitalism was firmly established, some elements of society stand up against the demands of the market and others may appear ready to do so. In response, the Procrusteans stand ready to impose their will, unleashing violent repression when necessary. For example, in Uruguay, when such repression was in full force, the journalist Eduardo Galeano observed, “People were in prison so that prices could be free.”¹⁴

Unlike the irrational sadist Procrustes—a parasite that destroyed its victim with no apparent purpose—those who control the capitalist economy are rational, singelmindedly devoted to the making of money. Toward this end, the Procrusteans routinely call upon the state to use its monopoly of force to keep everybody in line, while loudly proclaiming that the modern economy is the height of freedom as well as rationality. After all, people can freely choose to work where they want and buy what they want—and nobody commands anybody (except on the job).

Business leaders, politicians, and economists are quick to explain that the logic of the system is immutable. They come down hard on anyone who dares to question Procrustean rationality, even though they themselves are generally immune from the harsh demands of Procrusteanism. This posture helps to make the boundary between the realm of Procrustes and the invisible handcuffs even fuzzier. How can anyone rationalize why hours of work have not radically decreased despite the proliferation of modern, labor-saving technology? How can anyone reconcile increasing job insecurity and stagnating wages with market efficiency? Are these conditions the natural functioning of the labor market or the intentional manipulation of Procrusteans?

We will make the case that ultimately the market is Procrustean and, like Procrustes, destroys its surroundings. Viable alternatives do exist. They might seem impossibly utopian, but only because the gate-keepers of the Procrustean economy stubbornly refuse to accept any dialogue or even the possibility of a dialogue. As Margaret Thatcher adamantly proclaimed, “There is no alternative.” The iron bed must remain in place. Everyone must learn to accept the dictates of the Procrustean economy—to voluntarily don the invisible handcuffs. There is no choice in the matter. To defy the logic of the market would be suicidal—at least in an economic sense.

As we shall see, the truth is otherwise. The Procrustean ideology is as absurd as it is inhuman. Let us begin now to see how. First, let us critically evaluate the market. Then let us point ourselves in a more positive direction. Only after people get beyond the idea that the system must be first can society tap into people’s potential and create a more fulfilling way of life. With sufficient intelligence, courage, and imagination, we can get the kind of economy we deserve—an anti-Procrustean one in which the productive system will finally adjust to meet society’s most pressing needs.

CHAPTER TWO
Disciplining Workers in the Procrustean Bed

Jobs! Jobs! Jobs!

The most compelling defense of the inverted priorities of Procrusteanism concerns jobs: any policy that dares to give people’s pressing needs priority over the rigid imperative of the market will surely result in a loss of jobs. In fact, the promise of job creation drives the rhetoric of almost all economic policies. Business demands tax breaks, relief from environmental protection, and a host of other special treatments, while the rich demand tax cuts for themselves, all in the name of creating jobs, even when the evidence for the job creation is weak or nonexistent.¹

For all their talk about job creation, the largest corporations—the businesses that win a disproportionate share of the benefits from playing the job card—actually create few jobs. According to a report published in 2000, toward the end of a period of unusually vigorous job growth, the top 200 corporations worldwide employed a mere 0.78 percent of the world’s workforce, even though their sales accounted for 27.5 percent of world economic activity.² That business is not particularly good at creating jobs—especially good jobs—should come as no surprise. Wall Street rewards corporations for eliminating jobs, not creating them. Profits rather than jobs are the highest priority for business leaders. However, big business is exceptionally skillful in collecting subsidies based on the false hope of job creation—often in amounts in excess of $100,000 per job, even when the jobs are short-lived or nonexistent.³ For example, when Northwest Airlines threatened to move from Minnesota, the state granted the company $828 million for a repair facility with 1,500 jobs. Once the agreement was in place, the company accepted an immediate loan of $270 million as part of the deal. Not long after, it announced that the facility and the jobs were on hold.⁴ After the company went bankrupt in 2005, it show...