Is Capitalism Washed Up?

Inequality in an Age of Decline, by Paul Blumberg, New York: Oxford University Press, 1980, 290 pp., $15.95.

American capitalism is stagnating. The poor will get poorer, and many in the middle-class will fall into the proletariat with the falling rate of affluence. Social conflict along ethnic and interest-group fault lines will sharpen; the class struggle will intensify.

And then? Inequality in an Age of Decline, besides sparing us the cant found in so much New Left writing of a decade ago, also spares us a forecast of revolution. Thankfully, Professor Blumberg takes seriously both the clarity of his prose and the need to document his claims. And because he accepts the evidence of surveys that show the American public's continuing loyalty to free enterprise, even when the economic waters are pitching rough, we can put to rest the sanguinary prophecies of the youthful Karl Marx of The Communist Manifesto.

With fresh statistical threads, spun from the Bureaus of Labor Statistics and the Census, Blumberg takes the measure of our current economic crisis to refit the burial shrouds stitched by Marx in eager expectation of capitalism's demise over a century ago. American capitalism may yet survive, Blumberg tells us, but probably only if given prompt transfusions of "democratic economic planning."

This might play in Berkeley or Ann Arbor, but I wonder where the market is in Indianapolis, Wichita Falls, and Houston. Can progressive labor leaders and intellectuals rescue us from our "privatized material consumption," hobbled urban Gemeinschaft, public-sector squalor, and declining competitiveness—among other ills catalogued—when it is not at all certain the rank-and-file will show up for the muster? In a survey conducted by the AFL-CIO not too long ago, sizable majorities of its members took decidedly "conservative" positions on defense and economic policy issues. Fully 65 percent favored a constitutional amendment requiring a balanced federal budget, for example. (But here's the rub: the survey also flushed out responses showing that workers still look to government for protection.)

Blumberg wants to show that the American dream of unlimited economic mobility and a classless society, which intellectuals in the 1950s thought our postwar abundance had delivered, has been shorted by an overload of rising energy costs and foreign technological encroachment on our market circuits. True, living standards had risen for almost all Americans through the 1960s, yet the income and wealth gaps, Blumberg claims, remained largely unchanged.

But in chastising the celebrants of the "affluent society," Blumberg too easily decides the issue in favor of those scholars who claim no changes in wealth and income distributions had occurred. If you consider only privately held stocks and bonds, as Blumberg does, and omit the pension fund holdings of America's workers, you'll surely find less change in inequality than if you include those pension holdings. Indeed, you'll miss the most important postwar revolution of all: the effective transfer of publicly held corporations to working and middle-class ownership. And when you decide to exclude food stamps, medicaid, rent, and other in-kind subsidies to the poor when figuring their income share, on the grounds that these aren't monies they can spend at their discretion, that too will help your argument that life has worsened for the poor.

Blumberg holds more defensible ground when he examines the weakening of foreign and domestic markets for American-made goods, drawing out fresh observations on this topic from a satchel of Census data that this time comes off a scale using fairer weights. His criticism that American firms are sometimes too eager to license advanced technologies abroad before trying to exploit job-creating production at home should not be dismissed out of hand by those who think corporations should be free to follow their profit instincts wherever they may lead. Perhaps for the sake of market efficiency they should be. However, in the real political world of advanced capitalism, neglect of the consequences for jobs may have political repercussions that could end up by making matters worse for US industry.

Blumberg is also correct in pointing out how announcements of the coming of postindustrial society by Daniel Bell and others may have been premature. The size of the professional work force that would staff the new "knowledge industries" was greatly exaggerated, as was the demise of blue-collar workers. Here, the professor's statistical squadrons maneuver with maximum effect.

Since neither think tanks, semiconductor firms, nor even off- and on-shore drilling rigs can alone absorb the still numerous blue-collar workers in older industries threatened by foreign competition, can we create new industries or revitalize old ones before the political fuse is set? If we can't, then workers who are still loyal to the way American capitalism does business might move to Mr. Blumberg's corner and second the motion for "democratic planning."

A final point. It is somewhat vexing to hear the middle class being reprimanded in this book for possessing their "privatized toys and trinkets" and for allowing a Korvette's store to be built near the Long Island Expressway with tacky tract houses in place of a cathedral and peasants' huts grouped around it in "silent obeisance." This vexes because Blumberg quite readily excuses the anger of our poor who use the middle-class living standard as their reference, even though he notes that they are very well endowed with possessions by comparison with the poor of Asia and Africa. Is consistency too much to ask for? If the privatized material consumption of middle-class folk is a bad cultural habit, why insist that the poor should have more of the very things that are allegedly alienating the rest of us?

Edwin S. Harwood is chairman of the Department of Sociology at Mercer University.