The Great Inequality
by Michael D. Yates
Monthly Review
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Schutz’s approach here is ingenious, and it takes us directly to a consideration of class not just as a condition—as in, you and I are in different social classes—but as a dynamic relationship in which one class exercises power over another so that society is structured in such a way that there can be no escape from persistent inequalities unless the power (class) relationship is confronted directly and abolished. As we make our choices, we also collectively make “social choices,” that is we structure the very society that faces us with constraints when we choose. However, to say this is to suggest that we are not at all equal in terms of how society itself is constructed. At the level of society, power is critically important. Here is how Schutz defines power: “If person A can get person B to do something in A’s interest by taking advantage of some situation or set of circumstances to which B, were he or she free to choose with full knowledge from among all possible alternatives, would not give full consent, then A has power over B” (66).
While this is a general definition, it is still possible immediately to say some particular things about power. First, power allows a person unilaterally to change another’s constraints, and it can, when exercised long enough, change the habits of subordinates so that the latter act automatically in the interests of their masters. Second, those with personal power will inevitably also have social power, and this will allow them to make the rules that all must obey, and these will benefit the powerful. These rules, in turn, may come to seem normal, which lowers any costs the powerful would have to incur to maintain their power. Third, wherever there is power, there can be no democracy, since if there were, such power would be abolished by majority rule.
After defining power, Schutz examines it in a capitalist context. The most important kind of power is that which employers exert at the workplace. The power advantage capitalists have vis-à-vis their employees is as obvious as it is neglected by mainstream economists. Workers do not have the wealth to withstand periods without employment, and while they might quit a particular job, they cannot quit all jobs. In addition, the ownership of businesses gives capitalists the legal right to structure their workplaces (through detailed division of labor, mechanization, close monitoring to ensure maximum intensity, and so forth) so that the amount of labor used is always a good deal less than the supply of workers. This pool of surplus labor, Marx’s “reserve army,” serves to keep the employed in line, from making excessive wage and hour demands on the bosses. Employers also create artificial job hierarchies to split workers and keep them from seeing their common interests. In larger firms, seemingly impersonal bureaucracies make rules that come to be accepted as inevitable and even fair. All of these things allow employers to extract a surplus of work from their hired hands, a surplus that the employers get to keep. Power always involves a “taking” by the powerful from those without it. What is taken is the fruits of the exercise of their labor time. The control of the labor power of others over a definite period of time, in other words, is the principal basis of economic profit and power under capitalism.
Of course, a “pure” model of power in capitalism, one in which the capitalists merely exploit workers and the analysis stops there, is too simple, even if it remains the essential starting point, and Schutz devotes chapters to other classes, such as managers and professionals, to the hierarchy of businesses (with the largest monopoly capitals at the top), to political power, and to the power represented by complex social networks and cultural institutions such as colleges and universities and media. Each of these other power hierarchies has a certain degree of independence from the basic economic hierarchy, but each is, in the end, connected to it. Together, they serve inevitably to reinforce it; they make it more impregnable to change by, in large part, making it appear normal, the consequence of human nature, and creative of the best world possible. All of these other power structures make our economic system extraordinarily complex and difficult to penetrate, but they do not negate the essential importance of the capital-labor power inequality. They come into being because of it, and they make it stronger. We cannot understand any of them if we do not grasp it.
Once Schutz has laid out his theoretical position on inequality, he addresses the question of why it has risen so dramatically in the United States. He critiques several mainstream hypotheses, the most important of which is that the information technology revolution has raised the skill requirements (education and training costs) at the upper end of the wage hierarchy, while these costs at the lower end have either not risen or fallen. Since, according to neoclassical theory, wages equal the costs of entry into an occupation, this implies that wages at the top are rising disproportionately to those at the bottom. Schutz points out that wage equality began to rise at least a decade before the IT revolution took off. Also, education and training have become more equally distributed, and this should have been reflected in more equality. And if we consider a particular skill group, say those with college degrees in a certain field, inequality has risen within such groups. Schutz might have noted as well that the de-skilling practices associated with Frederick Taylor are deeply ingrained in what all managements do, so that any argument concerning widespread and long-lasting increases in skill requirements is implausible.
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