Don’t Confuse Anecdote with Structural Fact: Poverty and Unemployment are Structural Facts

Poverty and unemployment are structural and cyclical features of capitalism. They are the facts of life of the capitalist economy. Capitalists cannot put all labor into action at once; therefore, there are always unemployed people, and, without wages and salaries, and without government support, these people will always be poor. When the economy is doing well, the rate of unemployment is lower. When the economy is doing poorly, there are more unemployed people. But there is always unemployment and it has nothing to do with effort or lack of effort. It has to do with business cycles and the structure of capitalist production. Such things mark the nature of the beast.

Can individuals improve themselves? Sure. I know individuals who have. Are there people who are unemployed because they don’t want to work? Sure. I know people like this, too. But individual effort does not eliminate poverty any more than laziness explains unemployment. People who make this argument confuse anecdote with structural fact. 

I can provide two examples that illustrate my point. In 1969, unemployment was 3.4 percent. In 1983, unemployment was 11 percent. These facts contributed to poverty rates of around 11-12 and over 15 percent respectively. Now, if we believed that unemployment and poverty were caused by lack of effort, we would have to explain why it was that three times more people were lazy in 1983 than were lazy in 1969. It is an odd idea, and I don’t know how we would go about measuring aggregate laziness. It certainly couldn’t be measured by the unemployment rate, since that would form a tautology. It raises other questions, such as, if laziness causes unemployment, what causes laziness? Why did laziness decline after 1983? Whey did it go back up only a few years later?

We can dispense with such silliness. The reality is that unemployment was much lower in 1969 because we were at the peak of a economic boom. Unemployment was so much higher in 1983 because we were in at the bottom of the trough of a severe business recession. Poverty was much lower in 1969 because of the economic boom, along with the the fact that the government spent money on anti-poverty programs. In 1983, many of those government programs were being underfunded, and this surrender in the war on poverty combined with the recession to drive up the poverty rate. 

These realities are structural and cyclical features of capitalism, a very unstable economic system. They do not reflect individual behavior. Other observable facts dramatically disprove any crazy theories that could be devised to explain them. Most people who are poor work very hard. The problem is that they don’t get paid very much money for the work they do. And the work the poor do is the work they can find.

This about it. If it is impossible for everybody to work their way to the top (which it is), then it is rather meaningless to say anybody can work their way to the top, unless you believe that it is proper for the exploited to become the exploiter. The system is unjust because there is a structural barrier preventing most people from making it to the top. That barrier is capital—that is, the fact that a handful of people have the ability to profit and the majority don’t. Such a system is immoral precisely for that reason, namely, the few exploiting the many. 

Capitalism is a game in which most people lose everyday and will always lose. We can prove that simply by looking at the numbers provided by the capitalists themselves (Statistics for All Manufacturing Establishments in 2005, published by the US census Bureau). For every hour that an industrial worker labors in America, that worker earns an average wage of $17.69 (that’s $707.60 a week before taxes—not a lot of money). Yet that same worker produces $115.58 in value! Subtracting out the wage, that means the capitalist makes, on average, $97.89 off the worker every hour. That’s $2044.61 a week! The capitalist doesn’t produce that value. The worker produces all of it. Yet the worker only gets a fraction of the value he produces. The capitalist pockets all that dough he didn’t earn. Obviously, the worker is getting ripped off. Worse, the more productive the worker is the more he gets ripped off!

Here’s the paradox: if everybody could work their way to the top, and they did, capitalism would cease to exist. That’s obvious—without most people being exploited workers, capitalism cannot work. (Socialist revolution is everybody working their way to the top.) Furthermore, it’s a fact that people work hard and never make it out of poverty. Poverty is low in successful countries such as Sweden only because of massive government support for people. Without government intervention, capitalism systematically generates poverty and unemployment. Of course, you can continue believing the myth that people who work hard can work their way up the ladder if you want—a lot of people believe false things—but it doesn’t make it true.

The truth is that the people who work the hardest in our society are among the poorest, and the people who work the least are the richest. Indeed, the richest people, those who do no work at all, don’t even raise their own kids or mow their own lawns. They pay other people to do that—money they got by exploiting you!

Finally, it’s a myth that democracy is built on capitalism. Capitalism has existed for around 500 years. Democracy has existed since the dawn of the species, at least 100,000 years ago. In fact, capitalism is one of the least democratic systems in history. It ranks up there with feudalism and slavery, and for most people in the world, capitalism is as bad. Most capitalist countries aren’t democratic at all. True democracy—where you and me get to decide on the most important things our lives and community—can only be possible when we the people control the means of production, and such a situation cannot be capitalist. But the least any worker should settle on in the meantime under capitalism is social democracy and high labor density. To oppose those things is to oppose your own interests. 

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Andrew Austin

Andrew Austin is on the faculty of Democracy and Justice Studies and Sociology at the University of Wisconsin—Green Bay. He has published numerous articles, essays, and reviews in books, encyclopedia, journals, and newspapers.

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